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Pricing a medicine, like pricing any other product, will have its own complexities. * You need to fix a price which would cover the cost of your research that
by logicuce 11y ago
Pricing a medicine, like pricing any other product, will have its own complexities.
* You need to fix a price which would cover the cost of your research that went in (and also for unsuccessful researches that you write off for other ailments)
* You have idea about the scale of the ailment but little idea about market acceptance and reaction to your price.
* After market has accepted a price, even if it exceeds your predicted consumption by many fold, you have little incentive to change the price especially if insurance is paying for it.
* In a new market, because you have already recovered what went in to build the medicine, you can price it better.
In fact, insurance itself work very differently in US vs India. In India, in most cases your insurance won't pay for your medicines and medical expenses (diagnostics) if you don't end up hospitalized for at least a day. And that can govern how medicines are priced here because price has a direct implication on adoption.
- jakobegger 11y agoYou forgot one part: * You have to finance your highly paid sales staff. People always claim that pharma companies spend so much money on R&D, but when I look at job ads in the news paper I don't see ads for research positions, but lots of ads for sales positions (from pharma companies). I'd love to see actual numbers, but I'm pretty sure that sales is at least as costly as research (if not more so)
- drewrv 11y agoHere's some actual numbers for marketing vs research: https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
- logicuce 11y agoI believe the sales function is very much incentive driven. As a sales staff, your pay is very much correlated to the sales you do which means the stuff needs to sell. I think of it as, you get money for company and company gives you a small portion of that but in the process company is essentially paying you only when you bring in much more than what you cost.