Gah!
More assertions about the cost of drugs... big pharma wish us all to believe this; remember most new drugs are "me too" drugs - drugs in the same class as a competitor's new blockbuster. This is useful (people tolerate different drugs from the same class differently; some appear to have more side effects which sometimes end up being useful - occasionally more useful than the intended use) but rarely as useful as the discovery of a "new drug" would imply.
Next, let's remember what drug companies focus on. They are driven by a need to return value to their shareholders: although we'd all love an utopia where money is unimportant, this is reality. They are therefore interested in drugs that rich (white, Western) healthy people patients require for the rest of their life. Hence the focus on risk factors for cardiovascular disease (cholesterol, BP) and "lifestyle" diseases (female sexual dysfunction anyone?). A key fact to retain is that atorvastatin - a lipid lowering drug that is effective (everyone's risk of cardiovascular death drops by 20-25%! Whether it's worth taking it depends on your prior risk (and personal dislike of taking pills)) was making Pfizer US$1 billion profit annually. That's profit, not turnover.
Antibiotics that you take for a week? Not so good for profits. There is no big pharma research into antibiotics at present. (Small/medium sized pharma startups, yes)
So, back on topic: do drugs cost that much to develop? We don't have much evidence - you can read between the lines here:
http://www.ncbi.nlm.nih.gov/pubmed/21256615
Here's where the old $800million/new drug figure comes from:
http://www.ncbi.nlm.nih.gov/pubmed/12606142 (please note it is entirely from figures from the pharmaceutical industry, not publicly available info)
The $800 million was debunked at book length: http://books.google.co.nz/books?id=SKr5BDAmiMoC&printsec=frontcover&dq=the+$800+million+pill&hl=en&sa=X&ei=WLx6VJjyHoLRmwW73YLYDg&ved=0CBMQ6AEwAA
And recently(ish): "one can conclude that R&D costs companies a median of $43.4 million per new drug" from BioSocieties (2011) http://www.pharmamyths.net/files/Biosocieties_2011_Myths_of_High_Drug_Research_Costs.pdf
TL;DR
Don't believe drug R+D costs, all the evidence suggests they are much lower.
Biting the hand that feeds IT
