I have heard that far less than 1% of all drugs ever make it to market. A rare drug like this is also expensive because it takes up production space which could make millions of pills that treat high blood pressure or another common ailment, which they could sell at 10 cents a pill and still turn a profit.
It’s less than 1%, at least in my experience. We screen 100s of compounds looking for maybe 3 or 4 that can be tested further. Our goal is to screen out potential drugs as early in the process as possible, because the further a non-suitable prototype drug goes before it is eliminated from development, the more expensive its failure.
Also, experimental drugs typically do not take up production space from established production lines. Usually, there are separate production facilities for drugs in clinical trials. With earlier development drugs, there often is not a production line, because the conditions for making the drug on a large have not been determined yet. I was sitting in a meeting the other day where we were talking about having a protodrug custom made for small scale testing, and the cost was going to be about $300,000. One of the senior scientists thought that price was not bad.
When pharmaceutical companies charge small fortunes for new drugs, they really are trying to recoup their costs before their patents run out. It is not cheap to develop a drug through FDA approval, and the patent protection does not last very long. In addition to all of that, Americans end up subsidizing drug development costs, since some countries fix drug prices. In those cases, the share of development costs that foreigners should have to pay are rolled into the price that Americans pay.