3 ms·

If Americans didn't pay $800 for it, how would Europeans afford it? </sarcasm>

by BeetleB 11mo ago

deleted 11mo ago
[deleted]
oakesm9 11mo ago
Such an easily debunkable line with even the tiniest bit of critical thinking. You’re basically saying the drug companies subsidise a loss in Europe by over charging Americans, right? As the drug company is a private and doesn’t have to sell everywhere, why wouldn’t they just skip the loss making Europeans and just sell to Americans? They’d make more profit that way! That must mean they make some profit from the European prices, otherwise they wouldn’t be bothering.
- BeetleB 11mo ago
  Chill dude. I added a </sarcasm> tag. But to engage seriously: > You’re basically saying the drug companies subsidise a loss in Europe by over charging Americans, right? No - once they know how to manufacture a drug, it's dirt cheap for them to do so - they're still making a profit in Europe. The purpose of billing Americans a huge amount (other than they can get away with it), is to fund the research + trials for the next generation of drugs. Of course, even this argument doesn't hold water. I remember when pharmaceuticals spent more on advertising/marketing than on R&D (may still be the case).
- gensym 11mo ago
  Drug costs are dominated by the fixed costs of development. $20/dose may very well cover the marginal cost of production while being far too little to make the overall venture profitable.
- loeg 11mo ago
  It's true in general, but not the reason this specific drug is more expensive here.
- throwmeaway820 11mo ago
  > why wouldn’t they just skip the loss making Europeans and just sell to Americans? this argument is easily dismissible for any product that has high fixed costs but low marginal costs which applies to a lot of drugs
- ahtihn 11mo ago
  It's a bit more complicated than that. R&D for new drugs is incredibly expensive while the cost to actually produce most drugs is reasonably low. The price of drugs that make it to market needs to not only cover the cost to produce the drug, but also the cost of R&D and the cost of R&D of all the drugs that fail to get to market. Now this gets complicated when a company sells in different markets with actors that have different negotiating power. It makes sense to sell in any market where the company can get a profit per unit sold without including R&D. But if none of the markets allow enough profit to cover R&D, then it's not really worth developing any new drugs at all anymore. That's why people say that the US is basically subsidizing drug development. It's not that it's not profitable to sell in the rest of the world, it's just that margins are much lower which allows for a lot less risk-taking on R&D.
brandonmenc 11mo ago
Drug companies net profit margin is 2x that of a typical company. EU and America have equal size populations. Back of envelope, if the total cost of that drug went solely to profit, and profits were cut in half, it would cost $200 for both Europeans and Americans if we paid the same price. So yeah, we are kind of subsidizing the lower prices for Europe.

If Americans didn't pay $800 for it, how would Europeans afford it? </sarcasm>

by BeetleB 11mo ago

If Americans didn't pay $800 for it, how would Europeans afford it? </sarcasm>

deleted 11mo ago

[deleted]

oakesm9 11mo ago

Such an easily debunkable line with even the tiniest bit of critical thinking. You’re basically saying the drug companies subsidise a loss in Europe by over charging Americans, right? As the drug company is a private and doesn’t have to sell everywhere, why wouldn’t they just skip the loss making Europeans and just sell to Americans? They’d make more profit that way! That must mean they make some profit from the European prices, otherwise they wouldn’t be bothering.

BeetleB 11mo ago
Chill dude. I added a </sarcasm> tag. But to engage seriously: > You’re basically saying the drug companies subsidise a loss in Europe by over charging Americans, right? No - once they know how to manufacture a drug, it's dirt cheap for them to do so - they're still making a profit in Europe. The purpose of billing Americans a huge amount (other than they can get away with it), is to fund the research + trials for the next generation of drugs. Of course, even this argument doesn't hold water. I remember when pharmaceuticals spent more on advertising/marketing than on R&D (may still be the case).
gensym 11mo ago
Drug costs are dominated by the fixed costs of development. $20/dose may very well cover the marginal cost of production while being far too little to make the overall venture profitable.
loeg 11mo ago
It's true in general, but not the reason this specific drug is more expensive here.
throwmeaway820 11mo ago
> why wouldn’t they just skip the loss making Europeans and just sell to Americans? this argument is easily dismissible for any product that has high fixed costs but low marginal costs which applies to a lot of drugs
ahtihn 11mo ago
It's a bit more complicated than that. R&D for new drugs is incredibly expensive while the cost to actually produce most drugs is reasonably low. The price of drugs that make it to market needs to not only cover the cost to produce the drug, but also the cost of R&D and the cost of R&D of all the drugs that fail to get to market. Now this gets complicated when a company sells in different markets with actors that have different negotiating power. It makes sense to sell in any market where the company can get a profit per unit sold without including R&D. But if none of the markets allow enough profit to cover R&D, then it's not really worth developing any new drugs at all anymore. That's why people say that the US is basically subsidizing drug development. It's not that it's not profitable to sell in the rest of the world, it's just that margins are much lower which allows for a lot less risk-taking on R&D.

brandonmenc 11mo ago

Drug companies net profit margin is 2x that of a typical company. EU and America have equal size populations. Back of envelope, if the total cost of that drug went solely to profit, and profits were cut in half, it would cost $200 for both Europeans and Americans if we paid the same price. So yeah, we are kind of subsidizing the lower prices for Europe.