3 ms·
You've described the problem: > here is no “price” for a drug Yes, there is. If we look on their 10-K statements, they will have a fixed cost and a variable c
by Cupertino95014 2y ago
You've described the problem:
> here is no “price” for a drug
Yes, there is. If we look on their 10-K statements, they will have a fixed cost and a variable cost assigned to each drug. The variable cost will be just the manufacturing, and the fixed will be research and overhead allocated to this drug.
Total cost = fixed + variable. The rest is profit. We can decide what a "reasonable" profit is, and Total Cost + Profit is the notional "price."
That doesn't mean treating them like a state monopoly and the final price is fixed by law, but it does tell us a "price." All those things you mentioned (list, net, Medicaid, AMP, ASP) are kinda irrelevant.
- Scoundreller 2y agoI like to say the first dose of a drug costs a billion dollars and all the rest ever after cost a few cents.
- refurb 2y agoCost-plus pricing creates all sorts of perverted incentives in and of itself. And I’m not sure we want to go with “government mandated profit margins”. Do all drugs have the same margin? Even if the benefit is the same? That creates perverted incentives. It’s not a simple problem to solve at all.
- Cupertino95014 2y agoI don't think you read the whole thing. I specifically said "no cost-plus pricing." It's just a notional price for comparison with the real ones.
- refurb 2y agoLooking at cost and setting a price is cost-plus pricing.
- Cupertino95014 2y agoHello? Do you understand the word "notional"?