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One model is that a government pays a license fee that allows them to produce the drug in unlimited quantities for their country. (In practice, they could buy t
by jltsiren 2y ago
One model is that a government pays a license fee that allows them to produce the drug in unlimited quantities for their country. (In practice, they could buy the drug from the manufacturer at the marginal cost, or they could use another pharmaceutical company as a subcontractor.) Sometimes there is a deal, and the country may get orders of magnitude higher health benefits for a marginally higher price. And sometimes the company refuses, because the deal would interfere with their business model in other countries.
- AnthonyMouse 2y ago> One model is that a government pays a license fee that allows them to produce the drug in unlimited quantities for their country. How does this determine how much the license fee should be?
- jltsiren 2y agoThe same way as in any other business contract. How much the government is willing to pay, how much they expect to benefit, what other uses they have for the money, and so on. In practice, the company will likely get a bit more profit from the license fee than it would get from selling the drug normally.
- AnthonyMouse 2y agoThe government is effectively a monopsony in that context, so that isn't a real way to calculate anything, it's just the government making up a number which is likely to be too low (suppressing R&D) or too high (inflating costs). You could potentially fix the first one by giving the company the option to decline and instead sell the drug under the existing system, but how do you fix the second one?