The answer of Maarten Punt describes the mechanism in action very well.
I'd like give my view your last question.
Q. Is there a cure for high prices in the pharmaceutical industry?
The high prices are based on the monopoly granted by patents. The patents are there to protect the inventor, but it can be argued that in the case of medicine they give too much power to the inventor. I'd say we want a system that is fair to both consumer and inventor.
What is fairness? That is subjective, but I can sketch an imprecise picture. In my opinion fairness means that the inventor makes a profit on the investment, similar to the profit ratios in other industries. For the consumer it means that he does not have to pay all his retirement money for a pill that costs a small fraction of that for research and production. In case of a public health insurance: taxes are not paid to let the pharmaceutical company CEO drive a Bugatti car.
How could this come about? Two ideas.
The most rigorous system change is removal of the patent system for medicines.
To still do the research needed for development of medicine, dedicated (state sponsored) laboratories could be set up.
Another option is that research and production are disconnected. Research institutes can sell the right to produce medicine at a certain price, where the maximum is set by a third party (sufficient to cover all research costs with one license). Exclusive licenses are not allowed. In that way, when a medicine is successful, another production company can buy the rights as well, effectively reducing the price for medicine. Due to the economics of scale, the research costs will only have a very limited effect on the price of the end product.
These are suggestions. However, I believe that after improvement and tuning both ideas could work better than the current system.