Groundbreaking new drug for Alzheimer’s is going to come at a cost!

A new drug to treat Alzheimer’s has just been approved in the US but there is one big catch… it is really expensive! Priced at $56,000 for a year of treatment, the producer Biogen are being heavily criticised for charging so much for what could be a life-changing medication for the millions of Americans who suffer from the disease.

Alzheimer’s is a progressive disease which leads to loss of memory at first and then the ability to control one’s thoughts and language. The huge price tag raises ethical questions over the practice of not only Biogen, but all big pharmaceutical companies who charge extortionate prices for life-saving medication.

According to the Institute for Clinical and Economic Review (ICER), a US-based not-for-profit organisation that seeks to place a true and fair value on medical care, the new treatment should be priced at between $2500 and $8300 per year. If the calculation from ICER is even slightly accurate, this will mean huge profit margins for Biogen on the new drug.

Whilst profit maximising is the main objective for most firms, this pricing decision does reignite an age-old debate about the extreme lengths which pharmaceutical firms sometimes go to in achieving this goal. The question is: are they taking advantage of the fragile human condition to maximise profits for shareholders, or, are these firms simply responding to the invisible hand and providing a good at the price which the market has determined?