[nradov]

This article fails to mention the Quality Adjusted Life Year (QALY) concept. In theory we ought to set maximum prices that third-party payers (governments and private insurance) would pay for drugs based on how many years the drug would add to the patient's life and how much it would improve the patient's quality of life. Setting that maximum insured price would allow the free market to work through price signals and encourage drug companies to focus their research on areas most likely to deliver real benefits to public health. The US federal government currently values a human life at something in the range of $100K per year for regulatory purposes so that would give a starting point.

Of course the notion of setting limits on drug prices is politically fraught due to misguided concerns over "socialism", "big government", "death panels", etc.

https://en.wikipedia.org/wiki/Quality-adjusted_life_year