3 ms·
Because there is no price the competitor can charge that the original supplier can't match. There is no profit to be made, unless there is only a single manufac
by gizmo 9y ago
Because there is no price the competitor can charge that the original supplier can't match. There is no profit to be made, unless there is only a single manufacturer.
Also, it's difficult to acquire approval needed from the FDA to demonstrate the new drug is safe and equivalent to the already approved because the original producer won't cooperate and provide relevant samples to their competition so they can demonstrate equivalence.
- harryh 9y agoBecause there is no price the competitor can charge that the original supplier can't match. This is a commonly cited reason but I don't buy it. They're selling these things for 4 cents in tanzania so we're talking about something that is practically free to make. There are lots of things that cheap where we see competition in the US: paperclips, reams of paper, chewing gum, whatever. Why is there competition for these things but not cheap drugs?
- edko 9y agoMaybe the market in the US isn't big enough to recover the fixed costs. How many pills at 4 cents would they have to sell?
- harryh 9y agoYes, it definitely could be this which is why I said "my gut suspects the arduous FDA approval process." This could be the source of a lot of that fixed cost. I'd be generally curious to see data on what is involved in starting up a new production line for these kinds of pills. Is there a chemist in the house? :)
- gizmo 9y agohttps://dailyreckoning.com/generic-bioequivalence-and-outrageous-profits-in-biotech/ https://dailyreckoning.com/generic-bioequivalence-and-outrag... Look for the explanation by Derek Lowe in the linked article. Key points: > The FDA grants market exclusivity to companies that are willing to take ‘grandfathered’ compounds into compliance with their current regulatory framework.” Once a company does that, it gains an effective monopoly through the "generic bioequivalence" rules. Setting up the production line isn't the issue, because the pharmaceutical company will outsource the actual manufacturing of the drugs anyway.
- Symmetry 9y agoIf fixed prices inherent to the production of the drug were the key then I wouldn't expect a manufacturer would be able to provide this same drug in the UK for $2 without going out of business. Now, there are probably reasonable health and safety procedures done in the UK but not in Tanzania that bump the price up that much which I want done to my drugs as a wealthy resident of the first world but which I might not be able to afford if I were a Tanzanian. But $400 is clearly not required to make the drug up to reasonable safety standards.
- jacquesm 9y agoAt a guess because then that other manufacturer would undercut the first manufacturers cash cows. In other words: it could easily be a cartel of sorts with some regulatory capture thrown in to ensure the cake stays divided between entrenched parties. Situations like these should count as evidence that something isn't quite as it should be.
- harryh 9y agoCartel behavior is definitely an excellent hypothesis and I couldn't agree more about "something isn't quite as it should be."