One Pill, Many Prices: What’s the Real Cost of a Cure?
In early 2023, two men—living worlds apart—received the same diagnosis: Hepatitis C.
James, a construction worker from Texas, sat in his doctor’s office as the word “Sovaldi” came up—a breakthrough drug that could cure him in just 12 weeks. But then came the shock: the treatment would cost $84,000. Even with insurance, James would need to pay over $6,000 out of pocket—more than two months of his take-home salary. Unable to afford it, he left without starting treatment.
In Varanasi, India, Arif, a 45-year-old handloom weaver, heard the same diagnosis. His doctor prescribed the same 12-week treatment. The cost? ₹28,000—around $336. It still wasn’t cheap—but it was possible.
Same illness. Same drug. Same hope.Two radically different realities.
So why does the same life-saving drug cost thousands in one place and a fraction elsewhere?
What is Pharmacoeconomics?
After hearing James and Arif’s stories, it’s tempting to think the issue is purely about money. But in healthcare, pricing isn’t just about dollars and cents—it’s about value, access, and decision-making.
This is where pharmacoeconomics comes in.
Pharmacoeconomics is the science of evaluating the costs and consequences of pharmaceutical products. It helps healthcare systems, policymakers, and pharmaceutical companies decide which drugs to fund, how to price them, and what treatments deliver the most value—for both patients and populations.
In simpler terms: How much should we pay for a drug—and is it worth it?
This discipline blends health outcomes research, economics, and clinical data to answer questions like:
Pharmacoeconomics helps you decide.
It’s about measuring not just clinical impact—but economic and societal impact. And in a world with limited healthcare resources, these decisions are becoming more important than ever.
How we measure the value of a drug?
Understanding drug value isn’t just about price tags—it’s about what that drug actually delivers. Pharmacoeconomics offers different ways to calculate that value depending on the situation.
Let’s walk through four methods using realistic, simplified examples:
1. Cost-Minimization Analysis (CMA)
When used: Two treatments have the same outcome.
Example: A health system must choose between:
Both cure the infection in 4 weeks. The cheaper option (Drug B) is chosen—no need to pay more for the same result.
2. Cost-Effectiveness Analysis (CEA)
When used: To compare treatments based on how much they extend life—regardless of quality.
Example: A cancer drug adds 2 years to a patient’s life and costs $40,000.
Cost per life-year = $40,000 / 2 = $20,000 per life-year
But how do we know if that’s “worth it”?
Different countries use thresholds—basically, upper limits on what they’re willing to pay for each life-year gained.
If the cost per life-year is below this threshold, it’s more likely to be considered a good investment by health authorities.
3. Cost-Utility Analysis (CUA)
When used: To compare treatments using both the quantity and quality of life—measured in QALYs (Quality-Adjusted Life Years).
A QALY combines:
Example: A Hepatitis C treatment gives 10 extra years of life with near-perfect quality. That’s 10 QALYs. If the treatment costs $50,000: Cost per QALY = $50,000 / 10 = $5,000 per QALY
Again, if that’s below a country’s cost-effectiveness threshold, it’s considered a good deal. In the U.S., up to $150,000/QALY might be acceptable. In India, $5,000 per QALY could already be at the upper limit.
CUA is widely used because it allows apples-to-apples comparison across very different treatments—like cancer drugs, HIV therapies, or chronic disease management.
4. Cost-Benefit Analysis (CBA)
When used: Outcomes and benefits can be converted into money.
Example: A hepatitis C cure program costs $5 million to run. It prevents liver disease complications, saving $20 million in future costs. Net benefit = $20M - $5M = $15M
If the financial benefits outweigh the costs, the program is approved.
One Drug, Many Prices: A Global Snapshot
Sofosbuvir (Sovaldi) was hailed as a breakthrough—curing Hepatitis C with over 90% success rates in just 12 weeks. But what makes it equally famous (or infamous) is its drastically different price tags around the world.
Take a look:
So Why the Huge Disparity?
The answer lies in pricing strategy, economic context, and negotiation power.
1. Tiered Pricing: Gilead used differential pricing, adjusting the price based on the country's income level. High-income countries paid premium prices, while low- and middle-income countries received substantial discounts.
2. Voluntary Licensing & Generic Manufacturing: In India and many developing countries, Gilead granted licenses to local manufacturers like Cipla and Natco. This allowed mass production of low-cost generics.
3. Patent Protection & IP Laws: In countries like the U.S., strong patent protections keep the price high by blocking generics. In India, patent challenges allowed access at dramatically lower costs.
4. Health System Negotiation Power: The UK’s NHS negotiated national pricing. Egypt ran a mass procurement program to treat millions. The U.S., lacking centralized negotiation, left patients to face market prices—unless covered by insurance.
5. Cost vs. Value Perception: In the U.S., $84,000 may still be considered “cost-effective” under pharmacoeconomic thresholds. But cost-effectiveness doesn’t mean affordable.
What the Future Holds
The story of Sovaldi opens a bigger conversation. As innovation accelerates, so does complexity in how we price, evaluate, and access new treatments.
Key Questions:
This article isn’t advocating for price regulation—it’s offering perspective.
Pharmacoeconomics is how we understand the cost of a cure—beyond dollars. It’s about life, systems, and choices.
It’s time patients, providers, and policymakers come together to redefine what value truly means in healthcare.
Let’s talk:
Have you seen drug pricing disparities firsthand? Do you think personalized pricing is fair or flawed?
Drop your thoughts below.
#Pharmacoeconomics #HealthcareAccess #DrugPricing #ValueBasedCare #PublicHealth #Sovaldi #MBA #HealthTech
Interested in research, monitoring, and investigation of everything related to the Earth, the Earth’s atmosphere, and the links with the universe, the hourglass
2wNice subject Thank you
Clinical management & operations consultant at True North Clinical Compass LLc
4moDrug pricing is not simply a business strategy — it’s a reflection of the system’s underlying values. The reality is that disparities in cost across countries aren’t driven by manufacturing differences — they’re driven by what systems permit and prioritize. In the U.S., a fragmented payor structure, weak negotiation leverage, and market-driven regulatory gaps allow price elasticity that would be unthinkable elsewhere. Meanwhile, other nations embed collective negotiation and centralized value assessments into their systems from the start. If we want sustainable change, it requires more than outrage — it demands building systems that prioritize value over volume, negotiation over monopolization, and transparency over transactionalism. Thank you for sparking this discussion. Real healthcare transformation starts exactly where you’ve pointed: by asking hard questions about the structures we often take for granted — and having the courage to reimagine them.
Economics Postgrad student | Author & Content Creator | GST Practitioner| Business Development |
5moBeing economics student I can explain this to you , every country has different price level due to inflation or deflation ,by that way varanasi would provide drug at low cost where Indian money value is declining and Texas has demand for money so value of money increases ,so the cost of drug is comparatively high Ms.Shivani Rapolu
MBA 2025 | Storyteller | Entrepreneur | Agile Transformation Canadian citizen eligible for TN visa – authorized to work in the US with immediate availability in Management Consultant and Analyst roles
5moEthically speaking, AI use itself be transparent including but not limited to how it affects pricing of insurance plans, decisions on claims, and so on. The challenge is when the Pharma companies set prices based on income level of the country and not based on jurisdictions. Maybe AI will help with localized pricing the same way that its helped marketing go from Million people in 1 segment to each person is a segment. But that leads to a whole new can of worms being opened with people traveling to "low price states" to escape high costs. Without financial incentives, Big Pharma has less motivation to reduce drug prices unfortunately.