The ups and downs of drug company research costs

The pharmaceutical industry has long argued that U.S. drug prices are high to help pay for the risky business of inventing and developing new medicines. A glance at research and development expenses for eight of the largest drug companies shows their research budgets depend on the sales of drugs — and drug companies aren't afraid to take a hatchet to R&D if sales disappoint.

The takeaway: Developing drugs is an expensive process that costs billions of dollars and frequently ends in failure. But after drugs get federal approval, their prices often far exceed R&D costs, taking almost all of the risk out of the process.