1. Cost of Production:
Determinants of Price Includes all costs associated with the development and manufacturing of the drug, including raw materials, labor, and overheads.
2. Research and Development (R&D) Costs:
The significant investment in R&D is a major factor in drug pricing, aimed at recouping the expenses involved in bringing a new drug to market.
3. Competition:
The presence of alternative drugs and generics in the market influences pricing strategies.
4. Market Demand:
The demand for the drug, influenced by its efficacy, safety profile, and the prevalence of the condition it treats.
5. Regulatory Environment:
Government regulations and healthcare policies can limit how pharmaceutical products are priced, especially in markets with price controls.
6. Patent Status:
Drugs under patent protection can be priced higher due to the lack of competition, whereas generics and off-patent drugs might be priced more competitively.
7. Value-Based Pricing:
Prices are increasingly determined based on the value the drug provides to patients and healthcare systems, considering factors like improvement in quality of life, treatment outcomes, and cost savings from avoided healthcare expenses.
