6 ms·
In that case, why aren't there rules to limit profit margins on live saving drugs?
by gingabriska 7y ago
In that case, why aren't there rules to limit profit margins on live saving drugs?
- zip1234 7y agoOnce drugs are not protected by patents, competition should reduce prices. Unless competition is not working because of price fixing or something else related.
- kristopolous 7y agoIt's so much more lucrative to just slice the orphaned drug catalog up in a cartel structure. You charge robbery rates for drugs A, C and F and I'll take B, D and E. We both make lots of money and don't have to worry about each other. Competition assumes sellers don't collaborate and negotiate but they do all the time.
- cloverich 7y agoMore pointedly competition only works when it exists.
- braythwayt 7y agoThat's not how competition works. How do street drug dealers compete with each other? Not by lowering prices. No. They actually attempt to monopolize their territories by either eliminating or merging with their competitors, until a stable state is reached. They then set their prices to maximize margins and profits. This continues until something happens to destabilize the market, at which point there is some kind of struggle or even war, which stops when another stable state is reached by eliminating or merging the competitors. Without regulation to prevent the creation of monopolies and cartels, this happens in legitimate businesses just as much as street drug dealers. Competition by lowering price does happen, but when it does, it is part of the unstable phase that ends when another stable monopoly or cartel forms, at which point margins go right back up.
- frgtpsswrdlame 7y agoVery interesting perspective, what has informed it? I'd like to read more.
- xattt 7y agoThis is one model of free-market economies I hadn’t considered. Thank you for the mind shift!
- roenxi 7y ago> ... monopolize their territories by either eliminating or merging with ... The elimination part of that is important though. If companies were allowed to round up a group of the boys and go break some kneecaps when the boss didn't like something then it is true there won't be a lot of competition. But in civilised country that isn't an option. Nobody wants that level of deregulation - basic policing of physical safety is something of a given. People are somewhat protected by law in their attempts to compete.
- braythwayt 7y agoCompanies eliminate each other all the time. Maybe--and I only say maybe--physical assault of executives is not an option. But companies do things like dump product to drive a competitor bankrupt, and then raise their prices back up. After that happens a few times, people get the message that there is no money to be made competing with them. Or they play patent games and litigate the competition either out of business, or strongarm them into joining a patent cartel. The tools may be different, but without specific anti-monopoly and anti-cartel regulation that is enforced aggressively, companies will ruthlessly drive markets towards monopolies or cartels.
- deleted 7y ago[deleted]
- unethical_ban 7y agoHonestly? Free Market Evangelists who think that price controls on medication is socialism (but coal subsidies for outdated jobs in West Virginia is "American").
- Barrin92 7y agoculture and ideology basically. Capping drug prices is the norm in free market havens like Singapore to Scandinavian welfare states. It's not just prices as well. The US stands also out as being one of three countries that allows direct consumer drug advertisements.
- anticensor 7y agoAnd the only one that allows prescription drug ads.
- pmiller2 7y agoNot true. New Zealand also allows this. https://en.wikipedia.org/wiki/Direct-to-consumer_advertising#New_Zealand https://en.wikipedia.org/wiki/Direct-to-consumer_advertising...
- JamesBarney 7y agoIt's hard to do because the upfront costs are so high you'd drive out manufacturers.
- unethical_ban 7y agoTell me more about the upfront costs of Insulin.
- JamesBarney 7y agoThe upfront costs of building out an insulin production facility and getting it FDA approved are quite high. Especially because insulin and insulin-analogs are large molecules that are hard to prove are biologically equivalent to their patented versions. Which is made even more difficult by a large number of patents surrounding the manufacturing process the brand name company uses to produce it.