> -----Original Message----- > From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On > Behalf Of jon louis mann > Sent: Friday, July 13, 2007 12:23 PM > To: Killer Bs Discussion > Subject: U.S. health care > > > if that is the dynamic, dan, then anerica is subsidizing the rest of > > the world, which would be justice. > > If you are talking about Sub-Sahara Africa, and other third world > countries, > I would certainly favor ways of lowering the cost of drugs in those > countries. But, I don't think we need to subsidize Canada, Japan, the > EU, and other developed prospering countries. > Dan M. > > i doubt they would be doing it if it were not profitable. big pharm > doesn't have strong enough lobbies in other developed countries to fix > the price of their pills, etc...
Huh? That's not how it works. Let's say the a new cholesterol drug is developed, that not only reduces the level of cholesterol, but over a year, virtually eliminates the buildup that causes heart attacks. It's a hot commodity, and will sell well. In the US, they charge what the market will bear. Folks lobby their insurance companies to put it on the formulary, and it goes on.... It costs about 10 cents/pill to make, but can be sold for $5.00/pill. The company can see 1 billion of these pills per year in the US for gross profit of almost five billion dollars per year. Now, other countries are interested in this pill, and start to negotiate prices for use in their nations. Even if they negotiate for only $2.00/pill, it's a lot of profit for the drug company. If it sells another billion pills/year overseas, that's another 1.9 billion/year profit. So, what happens if the US negotiates on drug prices....and the price available in the US is only $1.90/pill. Don't they still make billions? Yes, but...that's knowing the pill will work. When the particular drug starts testing, odds are long against it working without unacceptable side effects. People doing cost-benefit analysis beforehand make decisions concerning whether starting on the path to develop the drug based on the expected profits. Profits in the drug industry are high as a percentage basis...I think something like 15%-$20 of revenue for net profits is typical. FWIW, this is not too unusual for high risk ventures. Most new drugs never make it to market. It's the relatively few multi-billion drugs that pay for all. The US can, today, mandate lower prices on may drugs, remove patent protection on these drugs, etc. and get lower prices. One side effect will be a drop in research into new drugs...the amount it drops is dependant on how much the projected income for a successful new drug drops. This is not, at all, a bad thing. I hope the price in the rest of the developed world rises to meet the falling US price, so the cost of research is born more evenly. But, if not, we will see more and more field match what is seen in vaccines...you can find companies to manufacture them, but there is little interest in new research because it doesn't pay. > the poorer countries pay what the > market will bear and the profit there is minimal. maybe it limits the > black market...? Right now, companies are afraid that cheap Third World drugs would find themselves back in developed countries....competing with their own product there. It took strong arm tactics by governments in the developed world to initiate such programs. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
