02-13-2017, 09:31 PM
(02-13-2017, 07:48 PM)Warren Dew Wrote: Big pharma can charge ridiculous prices because the government prohibits reimportation, that would force their prices down through competition.
If government was not involved in drug pricing they couldn't prohibit reimportation. But if government were not involved in drug pricing this wouldn't work, because the drug prices would have the same high prices in the other countries as here. For example, if you buy a branded Pfizer drug in Canada you will get the exactly same product as we sell in the US. The prices would be exactly the same except the Canadian government makes us charge them a lower price than the US government does. The US government permits us to gouge Americans because you support that by voting Republican (when Republicans designed the Medicare Part D, they stipulated that the government could not bargain for lower prices).
When drugs go off patent and become generic competition does take hold. But even then prices sometime soar, as was the case recently with this guy who acquired a company and hiked the price enormously. The problem is as follows. A lot of drugs (e.g. cancer drugs) are only taken by a relatively small number of people for a limited period of time. Imagine a drug for a common cancer that 1% of the population will get sometime in their lifetime. THat would be 3.3 million people. Assume almost all of there people contract this cancer in a 30 year age range, so than in a given year 110,000 get this disease. And suppose the standard treatment is 3 months of this generic drug. That means at any given time about 28000 are getting this drug. Suppose the dose is 50 mg a day. This means US sales of the drug are 14 kg per day or about five tons per year. Say the drug costs $1000/kg to make. The makes it a $5 million product. Add a 30% margin and you have 1.5 million. If we could get a third of that market by entering that would be half a million. And yet we would have to invest maybe 1-2 million of resources to bring it in. Ain't worth it, so we pass. And that's why even old, well-established drugs can soar in price.