SRA-E Lisbon 2017

In this paper we observe how the French population react to the communication of the pharmaceutical industry regarding the prices of innovative drugs. After explaining the French regulation on drugs price setting, we quantify the costs of R&D and the returns on investment of the 15 largests pharmaceutical companies wolrdwide. Whereas these costs and the financial constraints of the pharmaceutical industry may explain the prices of innovative drugs, we observe that both employees from these companies and patients consider prices are too high and profit margins too important. Based on interviews of key employees from the pharmaceutical industry, representatives of patients associations and state officials from the French Ministry of Health, we observe two important failures in the pharmaceutical industry communication: first, patients and the overall population are not familiar with the French regulation and therefore believe that pharmaceutical industries are not regulated and free to decide the price of their innovative drugs; second, managers within the pharmaceutical companies have lost their credibility and are not able to provide relevant information to their employees who are now reluctant to work for the pharmaceutical industry.