3 ms·

Big pharmas don't set the price for drugs based on their cost. They base the price on what people on different regions can pay, thus maximizing their profit. Co

Big pharmas don't set the price for drugs based on their cost. They base the price on what people on different regions can pay, thus maximizing their profit. Cost is not a variable for the price, how much money people have in that sector is really the basis of it.

WalterBright 10y ago
Companies ignore costs at their peril. In fact, the usual reason for corporate failure is their costs exceeded their revenue. Pricing can be very complex topics, people have written whole books about it, like the classic "Strategy and Tactics of Pricing" by Nagle.
hga 10y ago
That's the most very basic principle of marketing and sales, so why "big pharmas" wouldn't engage it would be curious. In field where marketing and pricing are much less understood, like ours, the trick is that after you establish acceptable pricing for your widgets, you then compare that to all your production, etc. costs to to see if you should keep selling them etc Note that in many "regions" "big pharma" negotiates the price with a penny punching government Note also some drugs are inherently expensive to produce, I'm thinking one anti-HIV one that had the usual suspects screaming, but it has 3 chiral centers (ouch!; for a layman's analogy illustration, Derek Lowe wrote a good one using ballons...).
- hx87 10y ago
  > Note that in many "regions" "big pharma" negotiates the price with a penny punching government That's one of the reasons why drugs are so expensive in the US--we are one of the few countries to not have government negotiating our side, so pharmaceutical companies have to make their profit here.
  - hga 10y ago
    Indeed, and if we "fix" that, well, I satisfy myself with the thought that many of the people supporting that policy, and/or their loved ones, will needlessly suffer and/or prematurely die because they stopped the development of a drug that would have saved them.

WalterBright 10y ago

Companies ignore costs at their peril. In fact, the usual reason for corporate failure is their costs exceeded their revenue. Pricing can be very complex topics, people have written whole books about it, like the classic "Strategy and Tactics of Pricing" by Nagle.

hga 10y ago

That's the most very basic principle of marketing and sales, so why "big pharmas" wouldn't engage it would be curious. In field where marketing and pricing are much less understood, like ours, the trick is that after you establish acceptable pricing for your widgets, you then compare that to all your production, etc. costs to to see if you should keep selling them etc Note that in many "regions" "big pharma" negotiates the price with a penny punching government Note also some drugs are inherently expensive to produce, I'm thinking one anti-HIV one that had the usual suspects screaming, but it has 3 chiral centers (ouch!; for a layman's analogy illustration, Derek Lowe wrote a good one using ballons...).

hx87 10y ago
> Note that in many "regions" "big pharma" negotiates the price with a penny punching government That's one of the reasons why drugs are so expensive in the US--we are one of the few countries to not have government negotiating our side, so pharmaceutical companies have to make their profit here.
- hga 10y ago
  Indeed, and if we "fix" that, well, I satisfy myself with the thought that many of the people supporting that policy, and/or their loved ones, will needlessly suffer and/or prematurely die because they stopped the development of a drug that would have saved them.