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A pharmaceutical company raising their prices 10x indicates that there is some kind of scarcity. That may be scarcity of a natural resource that cannot be overc

A pharmaceutical company raising their prices 10x indicates that there is some kind of scarcity. That may be scarcity of a natural resource that cannot be overcome, but in this case I expect the scarcity is in not having other people providing the same drug. So, we're back to someone withholding value that they could be providing to society. What I expect you are really trying to get at is that society has created rules that prevents others from providing that value, thus creating artificial scarcity. That is definitely true, but that's on society who created those rules and not truly related to the discussion taking place.

vlovich123 3y ago
> So, we're back to someone withholding value that they could be providing to society. The point OP is making is that value to society and money are only loosely correlated. Sometimes it correlates well but often not so well. That’s because there’s externalities in any marketplace that aren’t captured by the marketplace itself. So in the presented hypothetical case, the externality of “provide life saving treatment” is not captured in the costs side of the drug company’s balance sheet, so treating 75% fewer people for 10x more per unit cost makes the company look even more financially positive even though the change is a societal negative. And this externality shift in the balance sheet need not be a conscious “evil” decision. It could simply be market dynamics and competition playing out with the players not even realizing that they’re just making money from an externality and not providing any benefit. Your argument that it’s the legal system is flawed on several counts: 1. The US (and many places) have regulatory capture so the legislation preventing future competitors is written by today’s competitors. So while it’s the law on one hand, it’s the current set of players that’s the real problem. 2. There’s no collective buying power in places where this is a problem (eg you don’t see the cost of penicillin being an issue in countries where single payer healthcare is a thing). We’re starting to see this with insulin where non profits and California are getting into the game, but it takes a while to ramp up production so even if the price does come back down, the companies involved have managed to make a lot of money in the short term at the cost of lives and financial health of many households.
- randomdata 3y ago
  > it’s the current set of players Yes, that's right. Because others who could be playing cannot, in this case because society has decided they don't want more players, for whatever reason. However, the original premise still holds true given the constraints the actors are operating in. The 10x represents the additional value offered to society to operate within those rules created by society. So while, again, all acts have negative externalities, we cannot deny that society sees great value in having a limited set of players. In fact, society sees so much value that, in this example, it is willing to pay 10x more and accept that some people will not have access to drugs in order to maintain the benefits.
  - jchanimal 3y ago
    Insane argument that regulatory capture is the best possible outcome. Are you suggesting anything more just would undo society?
    - randomdata 3y ago
      It is what society deems beneficial. That is not necessarily what is the best possible outcome, to what you see being the best possible outcome. I suggest nothing. That would require injecting my feelings towards the matter, and that would be in bad faith.
      - UncleMeat 3y ago
        We've truly gone off the rails if considering our own feelings for important matters like these is considered bad faith.
        randomdata 3y ago
        The discussion is about how the world is. Our feelings about the merits or failings of that world have no place in the discussion, and even if we were to share them what purpose would they serve? That is where you would find us going off the rails.
UncleMeat 3y ago
Sure, we could improve society by changing how intellectual property laws work and being far more aggressive about anticompetitive behavior. I'd like that. In the limit, this would mean perfectly correlating monetary value with human value and then we'd live in a world where it really was the case that every unicorn company was providing significant value to society. But I don't think the presence of these broken systems means that we can conclude that every company that is worth billions is necessarily making the world a better place today. It is evidence in the other direction! Our society does not perfectly align wealth creation with providing value to society.
- randomdata 3y ago
  There would be no reason to make promises to these companies if they do make the world a better place in some way. A company worth billions cannot possibly get there without making society better. But there are always tradeoffs. Something that makes society great in some way is also likely to make society not great in some other way. As before, every act comes with negative externalities.
  - UncleMeat 3y ago
    See I just don't agree with this at all. We've clearly seen an example where a company can grow its net worth while making the world worse. It requires our current system of laws - but that's the world that we live in. This isn't a property of negative externalities. This is a property of social value being entirely disconnected from cash. Saving a rich person's life and a poor person's life has the same value to society. But a rich person can pay far more money to have their life saved than a poor person can.
    - randomdata 3y ago
      Said laws are created by society to benefit society. A pharmaceutical company is able to create an apparent 10x more value under such laws because they are delivering on the value of that regulated market along with the value of their product. Of course, as before, no benefit is consequence free. We see in the example that said benefit means that some people may not have access to drugs, which negatively affects society in other ways. That doesn't mean society sees no benefit. There are always tradeoffs. Something can be a benefit and detriment at the same time. Perhaps what you are trying to say is that you think that society should see better access to drugs as being a higher priority than the benefits it expects from the regulated market? But clearly society, which is free to repeal or change said laws as it sees fit, disagrees. Society will certainly never please all individuals. That's a tradeoff of having a society.

vlovich123 3y ago

> So, we're back to someone withholding value that they could be providing to society. The point OP is making is that value to society and money are only loosely correlated. Sometimes it correlates well but often not so well. That’s because there’s externalities in any marketplace that aren’t captured by the marketplace itself. So in the presented hypothetical case, the externality of “provide life saving treatment” is not captured in the costs side of the drug company’s balance sheet, so treating 75% fewer people for 10x more per unit cost makes the company look even more financially positive even though the change is a societal negative. And this externality shift in the balance sheet need not be a conscious “evil” decision. It could simply be market dynamics and competition playing out with the players not even realizing that they’re just making money from an externality and not providing any benefit. Your argument that it’s the legal system is flawed on several counts: 1. The US (and many places) have regulatory capture so the legislation preventing future competitors is written by today’s competitors. So while it’s the law on one hand, it’s the current set of players that’s the real problem. 2. There’s no collective buying power in places where this is a problem (eg you don’t see the cost of penicillin being an issue in countries where single payer healthcare is a thing). We’re starting to see this with insulin where non profits and California are getting into the game, but it takes a while to ramp up production so even if the price does come back down, the companies involved have managed to make a lot of money in the short term at the cost of lives and financial health of many households.

randomdata 3y ago
> it’s the current set of players Yes, that's right. Because others who could be playing cannot, in this case because society has decided they don't want more players, for whatever reason. However, the original premise still holds true given the constraints the actors are operating in. The 10x represents the additional value offered to society to operate within those rules created by society. So while, again, all acts have negative externalities, we cannot deny that society sees great value in having a limited set of players. In fact, society sees so much value that, in this example, it is willing to pay 10x more and accept that some people will not have access to drugs in order to maintain the benefits.
- jchanimal 3y ago
  Insane argument that regulatory capture is the best possible outcome. Are you suggesting anything more just would undo society?
  - randomdata 3y ago
    It is what society deems beneficial. That is not necessarily what is the best possible outcome, to what you see being the best possible outcome. I suggest nothing. That would require injecting my feelings towards the matter, and that would be in bad faith.
    - UncleMeat 3y ago
      We've truly gone off the rails if considering our own feelings for important matters like these is considered bad faith.
      - randomdata 3y ago
        The discussion is about how the world is. Our feelings about the merits or failings of that world have no place in the discussion, and even if we were to share them what purpose would they serve? That is where you would find us going off the rails.

UncleMeat 3y ago

Sure, we could improve society by changing how intellectual property laws work and being far more aggressive about anticompetitive behavior. I'd like that. In the limit, this would mean perfectly correlating monetary value with human value and then we'd live in a world where it really was the case that every unicorn company was providing significant value to society. But I don't think the presence of these broken systems means that we can conclude that every company that is worth billions is necessarily making the world a better place today. It is evidence in the other direction! Our society does not perfectly align wealth creation with providing value to society.

randomdata 3y ago
There would be no reason to make promises to these companies if they do make the world a better place in some way. A company worth billions cannot possibly get there without making society better. But there are always tradeoffs. Something that makes society great in some way is also likely to make society not great in some other way. As before, every act comes with negative externalities.
- UncleMeat 3y ago
  See I just don't agree with this at all. We've clearly seen an example where a company can grow its net worth while making the world worse. It requires our current system of laws - but that's the world that we live in. This isn't a property of negative externalities. This is a property of social value being entirely disconnected from cash. Saving a rich person's life and a poor person's life has the same value to society. But a rich person can pay far more money to have their life saved than a poor person can.
  - randomdata 3y ago
    Said laws are created by society to benefit society. A pharmaceutical company is able to create an apparent 10x more value under such laws because they are delivering on the value of that regulated market along with the value of their product. Of course, as before, no benefit is consequence free. We see in the example that said benefit means that some people may not have access to drugs, which negatively affects society in other ways. That doesn't mean society sees no benefit. There are always tradeoffs. Something can be a benefit and detriment at the same time. Perhaps what you are trying to say is that you think that society should see better access to drugs as being a higher priority than the benefits it expects from the regulated market? But clearly society, which is free to repeal or change said laws as it sees fit, disagrees. Society will certainly never please all individuals. That's a tradeoff of having a society.