4 ms·

That's just obscene! All that markup over just the label. I understand that it takes R&D to develop new drugs, but the amount of profit sought by drug companie

by eksith 13y ago

That's just obscene! All that markup over just the label. I understand that it takes R&D to develop new drugs, but the amount of profit sought by drug companies is stomach churning.

forrestthewoods 13y ago
Obscene? What's the "correct" markup? I sell digital, single-player video games. My manufacturing cost is zero and markup is infinite.
- msvan 13y ago
  Your marginal distribution cost is zero, but the manufacturing cost to design and develop the game is clearly not zero. The issue is that just because you can charge a lot doesn't mean you should. Although capitalism rarely works that way.
  - forrestthewoods 13y ago
    Perhaps a fair price point would be one that generates enough revenue to cover development costs and perhaps fund the next project as well? That sounds pretty reasonable.
  - quanticle 13y ago
    I think talking about capitalism, or rather, "free market", in the context of drug production is laughable. Free markets, as conventionally defined, have two characteristics: 1. Producers and consumers are both equally informed 2. There are so many producers and so many consumers that no single producer or no single consumer is able to appreciably change the market price Neither of those assumptions hold with the the drug market. Drug makers are massively more informed about the benefits and side effects of their drugs than I am. And there aren't that many drug manufacturers - and ongoing mergers keep shrinking the pool. In reality, the drug market is a barely regulated oligopoly, where a few large players manipulate the price signal to coordinate behavior so that they can move in relative unison to screw over the consumer. It's just like oil companies or airlines.
- anigbrowl 13y ago
  The correct markup is cost + opportunity cost, known in economics as 'normal profits'. Your manufacturing cost is not zero at all. You have significant fixed costs; your marginal cost is zero, or so close to it as to be negligible. Your average fixed costs fall with each copy sold, but unless you consider your time and labor entirely worthless you have to sell quite a few copies before you break even. Also, since your game is a discretionary expense, there's no significant opportunity cost to the non-purchaser, whereas the opportunity cost to someone who eschews or can't afford to purchase medication might be the person's life.
jaredhansen 13y ago
>amount of profit sought by drug companies is stomach churning What's the right amount of profit a company should seek? For reference, following are the latest reported profit margins of several companies: Eli Lilly: 20.34% AstraZeneca: 13.33% Novartis: 17.33% Apple: 19.53% Google: 18.11% Microsoft: 24.95% It's not at all clear to me that drug companies are somehow seeking more profits than other companies (or that they would generally be able to attain them in any case).
- johnchristopher 13y ago
  > It's not at all clear to me that drug companies are somehow seeking more profits than other companies. Could it be high-level tax evasion ?
  - quanticle 13y ago
    If it is, then why isn't everyone doing it? Are you saying that somehow AstraZeneca has wizardly accountants that Apple does not?
- HarryHirsch 13y ago
  It's the fact that pharmaceutical companies are involved in the sphere of public health that makes people uneasy about excessive profits, whatever "excessive" means. It's not only profits: lifestyle drugs, like statins and medication for ED are obviously a source of easy profit, meanwhile research into antibiotics is falling by the wayside. The fact that the existing antibiotics are becoming useless and there is nothing to replace them is going to be a disaster. There is this current discussion about vaccination skepticism (to use a polite word); one reason that parents omit to vaccinate their children is that no one living has experienced what a genuine measles or polio epidemic is like. The availability of antibacterials since the 1930s has been a similar miracle. You do not have to die of a severe infection, you can take medication against it. Unless there is investment in research, serious infectious diseases will be back.
  - ninguem2 13y ago

by eksith 13y ago

That's just obscene! All that markup over just the label. I understand that it takes R&D to develop new drugs, but the amount of profit sought by drug companies is stomach churning.

forrestthewoods 13y ago

Obscene? What's the "correct" markup? I sell digital, single-player video games. My manufacturing cost is zero and markup is infinite.

msvan 13y ago
Your marginal distribution cost is zero, but the manufacturing cost to design and develop the game is clearly not zero. The issue is that just because you can charge a lot doesn't mean you should. Although capitalism rarely works that way.
- forrestthewoods 13y ago
  Perhaps a fair price point would be one that generates enough revenue to cover development costs and perhaps fund the next project as well? That sounds pretty reasonable.
- quanticle 13y ago
  I think talking about capitalism, or rather, "free market", in the context of drug production is laughable. Free markets, as conventionally defined, have two characteristics: 1. Producers and consumers are both equally informed 2. There are so many producers and so many consumers that no single producer or no single consumer is able to appreciably change the market price Neither of those assumptions hold with the the drug market. Drug makers are massively more informed about the benefits and side effects of their drugs than I am. And there aren't that many drug manufacturers - and ongoing mergers keep shrinking the pool. In reality, the drug market is a barely regulated oligopoly, where a few large players manipulate the price signal to coordinate behavior so that they can move in relative unison to screw over the consumer. It's just like oil companies or airlines.
anigbrowl 13y ago
The correct markup is cost + opportunity cost, known in economics as 'normal profits'. Your manufacturing cost is not zero at all. You have significant fixed costs; your marginal cost is zero, or so close to it as to be negligible. Your average fixed costs fall with each copy sold, but unless you consider your time and labor entirely worthless you have to sell quite a few copies before you break even. Also, since your game is a discretionary expense, there's no significant opportunity cost to the non-purchaser, whereas the opportunity cost to someone who eschews or can't afford to purchase medication might be the person's life.

jaredhansen 13y ago

>amount of profit sought by drug companies is stomach churning What's the right amount of profit a company should seek? For reference, following are the latest reported profit margins of several companies: Eli Lilly: 20.34% AstraZeneca: 13.33% Novartis: 17.33% Apple: 19.53% Google: 18.11% Microsoft: 24.95% It's not at all clear to me that drug companies are somehow seeking more profits than other companies (or that they would generally be able to attain them in any case).

johnchristopher 13y ago
> It's not at all clear to me that drug companies are somehow seeking more profits than other companies. Could it be high-level tax evasion ?
- quanticle 13y ago
  If it is, then why isn't everyone doing it? Are you saying that somehow AstraZeneca has wizardly accountants that Apple does not?
HarryHirsch 13y ago
It's the fact that pharmaceutical companies are involved in the sphere of public health that makes people uneasy about excessive profits, whatever "excessive" means. It's not only profits: lifestyle drugs, like statins and medication for ED are obviously a source of easy profit, meanwhile research into antibiotics is falling by the wayside. The fact that the existing antibiotics are becoming useless and there is nothing to replace them is going to be a disaster. There is this current discussion about vaccination skepticism (to use a polite word); one reason that parents omit to vaccinate their children is that no one living has experienced what a genuine measles or polio epidemic is like. The availability of antibacterials since the 1930s has been a similar miracle. You do not have to die of a severe infection, you can take medication against it. Unless there is investment in research, serious infectious diseases will be back.
- ninguem2 13y ago