[AnthonyMouse]

> They can charge a high price for new drugs to recoup their development costs, & then charge closer to the cost of production once that development has been covered

You have just described the patent system. They get a period of patent protection to charge high prices, then anyone can make the drug and competition lowers prices.

There are some places where this falls down, i.e. there are some generic drugs that have high prices due to a lack of competition, but that's not the common case. Have a look at the price of Ibuprofen to see how unpatented generics ought to work.

What really causes the failures is the amount of bureaucratic overhead which deters other companies from entering the generics market. When the market for a drug isn't very large, the return from selling a generic is less than the regulatory cost required to enter the market, so nobody does. Lower the compliance costs and that doesn't happen as much.