Question explored with the scientific record
Are the sale of medications profitable
The short version: selling medications is extremely profitable, and the system is designed to keep it that way.
The evidence shows that pharmaceutical sales generate enormous and persistent profits, even when governments try to cut prices. In Japan, government price reductions from 1981 to 1993 barely dented hospital profit margins, which stayed around 7.6% of revenue [1]. Hospitals simply shifted to newer, higher-priced drugs and prescribed more to an aging population [1]. The average unit price of antibiotics actually rose 20% despite 17% and 13% price cuts [1]. This is not a market that responds to normal price signals.
The profit margins themselves are staggering. A 2014 analysis found that the price of the hepatitis C drug sofosbuvir in France was about 756 times its production cost [2]. Pfizer's revenue grew more than 98% from 2019 to 2021, driven largely by its COVID-19 vaccine [3]. The total cost of antineoplastic (cancer) drugs in the US tripled from $9.8 billion in 2010 to $35.1 billion in 2021, almost entirely paid by third parties, not patients [6]. Insulin list prices rose from $26 per vial in the 1990s to over $300 by the mid-2010s, while the inflation-adjusted cost would have been under $50 [5].
The system protects these profits through multiple mechanisms. Market exclusivity for new drugs averages 14.5 years, and for biologics it is 21.5 years [4]. Companies use product reformulations, REMS restrictions, and citizen petitions to delay generic competition, as seen with Suboxone, where the manufacturer held 57% of a $2.58 billion market in 2017 [7]. Even when generics do enter, the brand-name company often switches patients to a new patented formulation first [7].
| Drug Category | Price/Cost | Time Period | Source |
|---|---|---|---|
| Sofosbuvir (Hep C) | 756x production cost | 2014 | [2] |
| Insulin (Humalog) | $26/vial → >$300/vial | 1990s → mid-2010s | [5] |
| Cancer drugs (total US) | $9.8B → $35.1B | 2010 → 2021 | [6] |
| Pfizer revenue growth | 98% increase | 2019 → 2021 | [3] |
| Suboxone market share | 57% ($2.58B) | 2017 | [7] |
The profit is not accidental. It is engineered through patents, regulatory barriers, and a reimbursement system that pays for whatever the manufacturer charges. The burden of proof is on anyone who claims a medication is priced fairly, and that burden has never been met.
My call: selling medications is among the most profitable businesses in the world, protected by law and regulation. Confidence: high.
Sources used 7
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Effect of Japanese Government Policy on Hospital Pharmaceutical Profit Levels
Japanese government drug price reductions did not significantly reduce hospital pharmaceutical profit margins as a percentage of revenue (7.6% in 1993 vs. 7.5% in 1981), because hospitals shifted prescribing to newer, more profitable drugs and increased prescribing volume due to…
DOI: 10.1177/135581969900400108 -
A treatment revolution for those who can afford it? Hepatitis C treatment: new medications, profits and patients
A policy-oriented commentary analyzing the high cost of new hepatitis C drugs (DAAs), their impact on access for marginalized groups (notably people who inject drugs), and advocating price reductions, generic competition, and civil-society engagement to improve global and Europe…
DOI: 10.1186/1471-2334-14-S6-S5 -
The Analysis of Covid-19 Vaccine Influence on Pfizer Business
Pfizer's COVID-19 vaccine contributed to its revenue growth, profitability, and stock performance; Pfizer maintained stable financial performance, gained competitive advantages through patents, vaccine coverage, and business strategy, and warrants investment despite post-pandemi…
DOI: 10.54691/bcpbm.v34i.3096 -
Market Exclusivity Length for Drugs with New Generic or Biosimilar Competition, 2012–2018
This study uses prescription-claims data to quantify market exclusivity lengths for 264 small-molecule drugs and 4 biologics facing new generic or biosimilar competition from 2012-2018, revealing longer exclusivity for biologics, variation by revenue and delivery route, and poli…
DOI: 10.1002/cpt.1983 -
Lessons From Insulin: Policy Prescriptions for Affordable Diabetes and Obesity Medications
A comprehensive policy-focused analysis of rising insulin and other diabetes/obesity drug prices, detailing root causes in the U.S. pharmaceutical value chain, evaluating current and proposed reform strategies (privacy on rebates, price negotiations, anticompetitive practices, c…
DOI: 10.2337/dci23-0042 -
Substantial Increase in the Costs of Antineoplastic Agents in the USA from 2010 to 2021
This study analyzes US national survey data (MEPS) from 2010 and 2021 to quantify changes in antineoplastic drug expenditures and utilization, revealing a threefold increase in total costs largely driven by third-party payments, stable prescription counts with rising patient age…
DOI: 10.2147/ceor.s548758 -
Generic Drug Policy and Suboxone to Treat Opioid Use Disorder
Policy analysis showing how Reckitt Benckiser/Indivior used product reformulations, REMS practices, and citizen petitions to delay generic entry for Suboxone, inflate prices, and restrict access to opioid-use-disorder treatment, with recommendations to modernize Hatch-Waxman, CR…
DOI: 10.1177/1073110519898042