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Because the rules set forth by the law have created an incentive to set the price that maximizes their profit. They have a customer who has to buy their product

Because the rules set forth by the law have created an incentive to set the price that maximizes their profit. They have a customer who has to buy their product no matter what, and as a corporation beholden to shareholders they have a legal duty to maximize returns. I agree that it's a terrible system that incentivizes corporations into exploitative practices, but we can't really do anything about it without changing the rules they have to operate under.

kelnos 5y ago
Just because someone is incentivized to do something, it doesn't mean they're absolved of all responsibility or blame when they do that thing.
- Gimpei 5y ago
  Of course it doesn't. But a lot of the time, those people will not care whether you blame them or not. They'll just keep doing it. If there's a loophole, some unscrupulous person or company will always exploit it. Go ahead and blame them. When you've gotten that out of your system, change the law.
Grimm1 5y ago
That's a misunderstanding that I see a lot, they do not have a legal duty to maximize returns to shareholders. Not the source I usually use for this but, https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
- bpodgursky 5y ago
  I mean, you could give lectures and try to convince the CEOs to give up free money, or you could set up a system of rules that actually incentivizes reasonable drug prices. I can tell you which is going to work better.
Hokusai 5y ago
> and as a corporation beholden to shareholders they have a legal duty to maximize returns I never understood this point. If there is a legal requirement to maximize profit, CEOs should be legally required to have low compensations so as to maximize profit. But that is not the case. Why "maximize profit" does not apply to wasteful hyper paid CEOs? Worse even. Most companies reduce profits by moving them to other countries with lower taxes. Would not that be against the law?
hellbannedguy 5y ago
We all, including politicians, threw their hands up when Skirelli got greedy. SEC went after him for show. Not one law was enacted to prevent another greedy entity from doing the same thing. (I don't even blame the guy. Everything he did with that drug was legal. I do blame politicians whom did nothing to stop the greed afterwards. I really think most of these old coots on both sides actually believe totally free market medicine will save them one day from old age.)
triceratops 5y ago
> they have a legal duty to maximize returns They have a fiduciary duty to shareholders. That just means they have to act honestly, fairly, and always in the best interest of the shareholders. That's not at all the same thing as a duty to "maximize returns".

kelnos 5y ago

Just because someone is incentivized to do something, it doesn't mean they're absolved of all responsibility or blame when they do that thing.

Gimpei 5y ago
Of course it doesn't. But a lot of the time, those people will not care whether you blame them or not. They'll just keep doing it. If there's a loophole, some unscrupulous person or company will always exploit it. Go ahead and blame them. When you've gotten that out of your system, change the law.

Grimm1 5y ago

That's a misunderstanding that I see a lot, they do not have a legal duty to maximize returns to shareholders. Not the source I usually use for this but, https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

bpodgursky 5y ago
I mean, you could give lectures and try to convince the CEOs to give up free money, or you could set up a system of rules that actually incentivizes reasonable drug prices. I can tell you which is going to work better.

Hokusai 5y ago

> and as a corporation beholden to shareholders they have a legal duty to maximize returns I never understood this point. If there is a legal requirement to maximize profit, CEOs should be legally required to have low compensations so as to maximize profit. But that is not the case. Why "maximize profit" does not apply to wasteful hyper paid CEOs? Worse even. Most companies reduce profits by moving them to other countries with lower taxes. Would not that be against the law?

hellbannedguy 5y ago

We all, including politicians, threw their hands up when Skirelli got greedy. SEC went after him for show. Not one law was enacted to prevent another greedy entity from doing the same thing. (I don't even blame the guy. Everything he did with that drug was legal. I do blame politicians whom did nothing to stop the greed afterwards. I really think most of these old coots on both sides actually believe totally free market medicine will save them one day from old age.)

triceratops 5y ago

> they have a legal duty to maximize returns They have a fiduciary duty to shareholders. That just means they have to act honestly, fairly, and always in the best interest of the shareholders. That's not at all the same thing as a duty to "maximize returns".