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"Spending billions on stockholders" is an odd way to frame giving profits to the owners (the shareholders). Does a small business owner spend money on herself w
by jimmar 3y ago
"Spending billions on stockholders" is an odd way to frame giving profits to the owners (the shareholders). Does a small business owner spend money on herself when she makes a profit and moves money from the company account to her personal checking account?
Calling stockholders an expense misrepresents how businesses operate. "Spending" implies expense. Stock buybacks are a way of returning value to shareholders.
- deleted 3y ago[deleted]
- lcnPylGDnU4H9OF 3y agoThey led with mentioning executives, which is spending on employee salaries and bonuses. At any rate, I think it’s the same point to say “makes billions more in profit than they spend on R&D”.
- haswell 3y agoPlenty of companies do stock buybacks without also engaging in predatory pricing that customers are powerless to fight. The situation is even more problematic when you consider the lack of alternatives, and the often live-preserving nature of the product. > Stock buybacks are a way of returning value to shareholders. This is also a problematic framing that ignores the broader situation. And that’s the tricky thing about framing things. It’s easy to manipulate the narrative and obscure the unreasonableness of the underlying reality if you sufficiently narrow the frame.
- s1artibartfast 3y agoI think this understates the power and options of the customers. The typical alternative to receive what was state of the art care 10 years prior and off patent, and now 5% the price. The unfortunate part is the desire for such products is so low, that most of the time they are discontinued. It is essentially a tragedy of the commons in the US. Because all the costs are shared, every individual is happy to pay 20X for a product that is 10% better.
- refurb 3y agoWhat is “predatory pricing”? It seems like “predatory” is just a word people attach to things they don’t like.
- Freestyler_3 3y agoIts making the price higher because you know people are dependent on your product, well beyond a reasonable profit. I think 10x the price in other countries hints a bit to predatory pricing.
- refurb 3y agoWhat is a "reasonable" profit? 10%? 50%? 100%? What is a "reasonable" profit in an industry where it costs hundreds of millions to develop a product and 95% of the products fail?
- sofixa 3y agoWhen pricing a good with inelastic or not very elastic demand (like, say, healthcare or medical products), the threshold for predatory is very low because people can't just choose most of their healthcare needs or replace them with alternatives (arguably some parts can be vastly diminished with better lifestyle choices over the long term, but that's not solving the current and very inelastic demand). So, margins in the hundreds of percents is definitely predatory. I'd personally argue anything higher than 10-20% is morally bankrupt and I wouldn't be able to sleep at night if I were in the shoes of those responsible. If there is a hell, there's certainly a circle dedicated to people praying on the sick.
- refurb 3y agoAt 10-20% profit margin the pharmaceutical industry isn’t viable. The 1 winner in 10 needs to pay for the 9 losers. And of course there are alternatives. A brand new drug is replacing something older (even if just supportive care). Plenty of universal healthcare systems choose not to pay for new drugs because “they aren’t worth it”.
- graemep 3y agoThe point is that most of that profit comes from government incentives that are supposed to encourage R & D. i.e. we pay several times more on drugs than we would without paying those incentives to the businesses, but only a small proportion of that extra money goes into R & D. Its incredibly inefficient funding. My take on that problem. There are others. https://pietersz.co.uk/2007/02/patents-inefficient https://pietersz.co.uk/2007/02/patents-inefficient I made the same point nearly 10 years before that with regard to R & D vs marketing expenditure. Its not a new problem.
- jimmar 3y agoIt seems like we want for-profit pharmaceutical corporations to act like non-profit institutions. Any idea why non-profit institutions haven't risen in the world of pharmaceuticals?
- santoshalper 3y agoOr, we want for-profit pharmaceutical corporations to not take taxpayer dollars. You shouldn't be able to have it both ways, but at least in the US, you can.
- s1artibartfast 3y agoI hear this a lot, and I think that there is a fundamental misunderstanding of what's going on. People aren't upset by for-profit grocery stores taking tax dollars in the form of food stamps. They aren't upset by taxpayers giving money to for-profit hospitals to treat poor patients. The government is paying a For profit company to do something that the government wants. If the company would do it anyways, then of course I agree that the government shouldn't pay for it.
- tfourb 3y agoI think the difference is the extend of the profit. Big Pharma is incredibly profitable, while grocery stores are operating on very thin margins. Few people have a problem with a company doing business based on government expenditure, but specializing in maximizing profit from this reeks of profiteering.
- petre 3y agoHopefully you'll never need cancer treatment, because it would probably change your opinion.
- s1artibartfast 3y agoHopefully I will never have to test it, but I imagine cancer patients are also glad they don't receive a 1900's standard of care. Those that I do know who have had cancer were absolutely thankful that someone developed their treatments.
- gitaarik 3y agoWhat if there are better treatments that are being held back because they are less profitable?
- s1artibartfast 3y agowho would be holding them back? Patients and doctors want better treatments. There are government all around the world that want to save money? I know big pharma has a bad reputation, but they dont send out hit-men after competitors.
- oaiey 3y agoWhile that is true and how unregulated capitalism works, a society which enables capitalism (by laws, judges, ...) does not need to tolerate excessive profits on costs of its populations. Capitalism is not a law of nature. It is made by humans and can be adopted by the society. This is very common around the world.
- aknfffn 3y agoThe moral dilemma is profiting from disease and the ill-health of a population. The only argument against publicly funded drug production is that profit seeking is more efficient and the societal outcome is improved by not funding a public body to do this. As other comments highlight, not only do societies publicly fund research (eg C19), they provide a legal system that protects monopoly profits, and won’t use single-payer bargaining on price… So when pharmaceuticals then drop more cash on executives and shareholders it’s natural to question turning Covid19, cancer, or obesity etc into a profit centre for the wealthiest in society
- carlosjobim 3y agoProfiting from hunger, those pesky cooks. Profiting from people freezing, those deplorable tailors...
- supertimor 3y agoLol, how many multi-millionaire/billionaire chefs and tailors do you know?
- carlosjobim 3y agoHow many billionaire pharmacists do you know? If you extrapolate from chefs, you have farmers and then you have Bill Gates profiting from hunger.
- aknfffn 3y agoStraw man. I pointed out that publicly provided may be more efficient, my argument wasn’t whether profit seeking is universally bad
- __loam 3y agoOkay but stock buybacks should be illegal.
- darth_avocado 3y agoOkay, but they also spend more money on sales and marketing than they do on RnD. Surely that can be considered as “spending”.
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- btbuildem 3y ago"Oh no, would someone think of the poor shareholders" They're parasites and freeloaders, contributing absolutely nothing, and consistently siphoning off value. Americans love to harp on socialism / communism and look down on "useless eaters", but there is no class more useless, more entitled, and more toxic than The Shareholder.
- gahikr 3y agoI wonder what would happen if a critical mass of people with Roths, 401ks, index funds gave their proxy vote to Bernie Sanders instead of BlackRock, Vanguard, etc.?