You're talking about an infinite timeline where they are the sole seller of a drug that is used indefinitely.
This is false.
When patents expire the drug is also made by generic drug making companies for cheap. So upper bound of getting a ROI is the lifetime of a patent (30 years for drugs iirc, 10 years longer because it takes about 10 years to develop, so still effectively 20 years).
For every drug that is successful, they pour tons of money into drugs that are eventually considered useless. So the R&D isn't solely for the one successful drug, but also for the losses.
A competitor might come in 5 years with a drug for the same problem, that works better. Now the timespan for any ROI has been cut short to 5 years.
Looking at the profits of pharmaceutical companies: sure, most medicine is probably overpriced. But saying that they can get a good ROI at any price is false. They will need to recoup the billions spent on R&D.
Well, personally, I think the model is broken. One of the real issues here is that there are effective treatments for many conditions which do not get to market because they are unpatentable. For instance, St John's wort, which is about as effective as SSRI's is rarely used because it hasn't been through enough trials.
Claiming that the cost of clinical trials is the major reason that the drugs need to be priced that high is true, as far as it goes. The issue is that the pharmacuetical companies lobby for more regulation to keep out other treatments not backed by themselves. In addition, they focus on drugs that can cure lifestyle choices (obesity, for example) as rich people can afford them and these will provide a good ROI. Malaria, a disease which is eminently treatable is not focused on as it is a disease which effects poor people.
Another major issue is that the companies suppress negative research and studies which show defects in their products. Its an extremely broken system.
What I would propose is the following:
1) new development of drugs should be carried out by private companies and universities.
2) Patents arising from this research should be under a compulsory licensing scheme, based on the outcome of clinical trials.
3) Clinical trials should be paid for directly by healthcare systems, to avoid duplication of research and to prevent the suppression of negative research.
4) Manufacturing should be completely separate companies who can tool up and down plants. Currently, plants get built in anticipation of approval and then shut down if problems arise, which is extremely wasteful.
This would allow the private sector to retain development and manufacturing (but in different companies) and the governments would have much more incentive to conduct good clinical trials, and the results would be public so others could re-analyse the data and find better links with conditions, drugs and outcomes.
The thing is, when a company chooses to manufacture pharmaceuticals, it shouldn't just be 'business as usual' for them. They must realize that they have a social responsability to undertake besides making a profit, and that is even without a proper regulamentory agency or something of the sort.
Most countries have some kind of social welfare, so maybe these companies could have differentiated deals with those programs and still price whatever for those can afford it. It would both cover a market they wouldn't otherwise reach and not jeopardize those that imperatively need treatment and can't afford it otherwise.
But surely the social responsibility to help people isn't just limited to pharmaceutical companies? I mean, if you tell rich people that they don't have any responsibility to help sick people in India until they invest in a medicine company, and then suddenly they have to spend huge amounts of their investment helping those people then I think that's a bit unfair, and more importantly saying that will cause a lot of people to avoid investing in medicine.
Ultimately, matters of social responsibility ought to be governed by the government, using taxation to spread the burden equally among everyone who can pay.
This is false.
When patents expire the drug is also made by generic drug making companies for cheap. So upper bound of getting a ROI is the lifetime of a patent (30 years for drugs iirc, 10 years longer because it takes about 10 years to develop, so still effectively 20 years).
For every drug that is successful, they pour tons of money into drugs that are eventually considered useless. So the R&D isn't solely for the one successful drug, but also for the losses.
A competitor might come in 5 years with a drug for the same problem, that works better. Now the timespan for any ROI has been cut short to 5 years.
Looking at the profits of pharmaceutical companies: sure, most medicine is probably overpriced. But saying that they can get a good ROI at any price is false. They will need to recoup the billions spent on R&D.