Re: Judaism or Calvinism? (was: Re: Jewish unity re children's health bill)

In <facltg$tb8@xxxxxxxxxxxxxxxxxxxx> hrubin@xxxxxxxxxxxxxxx (Herman Rubin) writes:


You need to study Economics 101. It is not a different
patent law, and generics are not available faster.

The situation is that there is not a free choice of
pharmaceuticals in Canada, and in much of Europe. If
a particular drug is not in the formulary, you cannot
get it through the health system; you might not be able
to get it at all. So they can tell the companies that
you either sell it at our price, or not at all.

Now further, for most drugs half or more of the cost
is in the "overhead", so agreeing to supply drugs to
the state monopsonies may still pay the company.

I agree with the above, but wanted to expand on my answer to Eliyahu.
Speaking of Economics 101...

I looked at the balance sheets of a couple pharma companies, and they do
indeed have high profit margins -- 36% for Pfizer, as compared to 2% for
Coke.

Why? Seems to me that the most straightforward answer is the barrier to
entry. Surely every chemist in the country would be trying to produce The
Next Big Thing if they could and get even a 35% profit margin. But check
the figures - Pfizer spent $8 billion (billion with a b) dollars on R&D in
2006. As Eliyahu says, that's significantly less than their selling budget
(which seems to include admin plus advertising) but nevertheless, it's a
lot of dough.

Why so much? Because in our society, for better or worse, you can't market
a "good" drug. It has to be PERFECT. If it helps a million people and
kills 5, you're going to be sued for more money than you'd ever have
earned. If it injures a few hundred, you may well be put out of business.
So tread carefully! Perhaps this level of scrutiny is appropriate, I'm
really not sure, but it's a tradeoff, and we have to acknowledge that.

--s
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