Why are so many pharmaceutical drugs so expensive? In the US, the drug sofisbuvir, brand name sovaldir, and used to treat  liver disease hepatitis C, was launched with a price tag of $1000 a pill; and in the UK, the manufacturer Gilead recommended a twelve week course that costs £35,000.
There are roughly 160,000 people in the UK that require treatment and unprecedentedly the NHS chose to phase the drug in. This obviously has to do with the cost of the drug.
Why are so many pharmaceutical drugs so expensive?
Prices are high because drug firms have monopoly power, granted to them by the patent system. In addition the demand for the drugs is fairly inelastic because once you fall seriously ill you're often willing to pay a high price for the cure. If your insurance covers it, you won't even directly notice the price. So the companies can charge almost any price.

Now the patent system is there for a good reason: developing drugs is expensive and if not patented others may use your hard-obtained knowledge to their advantage, without paying for it. Therefore, if your patent is granted you get monopoly power for a while to recapture your investment, on the condition that when the patent expires the knowledge can be used by anyone.

There is no doubt that developing drugs is expensive but whether it justifies the prices charged is a different matter. The pharmaceutical industry is generally unwilling to reveal its costs for good reasons, and that makes estimating profit margins hard.

Part of the question is normative anyway because what would we consider "excessive" profit? What costs are justified when it comes to someone's health?

A fairly old article in the J of Economic Perspectives on this interplay can be found here:
https://www.aeaweb.org/articles?id=10.1257/jep.7.3.97

As for tags: microeconomics would certainly be better suited as would monopoly