What is your life worth ...

It's actually not a free-market because the patent -- a temporary, government granted monopoly -- poses a barrier to entry. In a "truly" free-market we wouldn't have any intellectual property at all: firms and individuals could produce whatever they wanted, and consumers would discriminate on the basis of price and quality. The best rationale for the fiction of "owning" an idea is that it generates incentives for people to do things that they would not otherwise do. Interestingly this device could reasonably be considered a form of "social engineering" -- that nefarious boogey term that frightens conservatives and libertarians. The intention behind it in the case of the writers of the U.S. Constitution was to "promote the progress of the arts and sciences." Since the purpose is utilitarian there's no principled reason why the government couldn't legislate against this company's pricing policies.
 
The problem is not with the pricing by the company. Drugs are extremely expensive to develop; a succesful drug must not only make a profit vis-a-vis its own development, it must make a profit to cover the research cost for all those drugs that "didn't make it". Also, with drugs for rare diseases, lowering the price has virtually no effect on demand, since nobody except those who have the disease will but it in any case.

So forcing the company to sell cheaper or to not get a patent would simply make the companies not develop those drugs, hence nobody will have them. What SHOULD (ethically, although perhaps it's hard to do practically) is to have the government subsidize the price of this drug to the client.

This way, the patient gets the drugs, and the company doesn't lose money. What is true is that the taxpayers are forced to pay for a drug that does not benefit most of them.

But of all the "injustices of taxation", surely this is a trivial "unfairness", if it is one at all: if you COULD decide which of your taxes to pay, would you really decide not to pay the amount that goes towards medical insurance and government healthcare?
 
Hmm... Enter socialized medicine, perhaps? The government buys the drug at market price and hands it out to the needy at no added cost for the patient. Could it work?
 
Skeptic said:
What SHOULD (ethically, although perhaps it's hard to do practically) is to have the government subsidize the price of this drug to the client.
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Watch the price jump to ten million a year. Can't price out the government.

What are needed, if the medicine is truly a necessity, are price controls in some form. Maybe from some cooperative industry regulatory agency. If they won't form one, then maybe the government does need to step in and do it.
 
Skeptic said:
But of all the "injustices of taxation", surely this is a trivial "unfairness", if it is one at all: if you COULD decide which of your taxes to pay, would you really decide not to pay the amount that goes towards medical insurance and government healthcare?
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I would, yes. But some say I am a cold heartless b****rd.
 
The fact that drugs cost a lot to produce is a meaningless fact. Drug companies make some of the biggest after cost profits of any businesses in existantance. Most drug companies also spend far more on advertising than they do on actual R&D.
 
Skeptic said:
The problem is not with the pricing by the company. Drugs are extremely expensive to develop; a succesful drug must not only make a profit vis-a-vis its own development, it must make a profit to cover the research cost for all those drugs that "didn't make it". Also, with drugs for rare diseases, lowering the price has virtually no effect on demand, since nobody except those who have the disease will but it in any case.

So forcing the company to sell cheaper or to not get a patent would simply make the companies not develop those drugs, hence nobody will have them.
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This is predicated on assumptions that in all likelihood do not hold for a particular company marketing a particular drug. There's no reason to believe that the price the market will bear will naturally cover the costs mentioned above. Also, do not forget that in the real-world the government already subsidizes the (very) profitable pharmaceutical industry.

What SHOULD (ethically, although perhaps it's hard to do practically) is to have the government subsidize the price of this drug to the client.

This way, the patient gets the drugs, and the company doesn't lose money. What is true is that the taxpayers are forced to pay for a drug that does not benefit most of them.

But of all the "injustices of taxation", surely this is a trivial "unfairness", if it is one at all: if you COULD decide which of your taxes to pay, would you really decide not to pay the amount that goes towards medical insurance and government healthcare?
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While of course the government is taxing the profits that accrue to the pharmaceutical company.

From a global justice standpoint, however, the high-price of this questionable colon cancer drug is negligable comapred to the diseases that claim the poorest people in the poorest countries (malaria, in particular). Companies have relatively little incentive to invest in researching diseases that afflict these poor when it's more profitable to develop and market products promising people in rich countries that they can overcome their shyness, baldness, and impotence. Again, there's no reason to believe that market forces (with patents) left to their own devices generate the socially just outcomes that underly their purpose and creation.
 
Skeptic said:
The problem is not with the pricing by the company. Drugs are extremely expensive to develop; a succesful drug must not only make a profit vis-a-vis its own development, it must make a profit to cover the research cost for all those drugs that "didn't make it". Also, with drugs for rare diseases, lowering the price has virtually no effect on demand, since nobody except those who have the disease will but it in any case.

So forcing the company to sell cheaper or to not get a patent would simply make the companies not develop those drugs, hence nobody will have them. What SHOULD (ethically, although perhaps it's hard to do practically) is to have the government subsidize the price of this drug to the client.

This way, the patient gets the drugs, and the company doesn't lose money. What is true is that the taxpayers are forced to pay for a drug that does not benefit most of them.

But of all the "injustices of taxation", surely this is a trivial "unfairness", if it is one at all: if you COULD decide which of your taxes to pay, would you really decide not to pay the amount that goes towards medical insurance and government healthcare?
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Yes, pharma companies do have a right to cover their fixed costs. Nobody here denies that*, and nobody here (except you, once again) claims that this is the reason for the protest.

The problem here, which you steadfastly ignore, is that the company said, "Hey, the drug is much more useful, so we´ll charge much more than we think we´ll need and make huge extra profits!"

And the idea that government should subsidize the drug is, to put it politely, not a stroke of genius; European experience with socialized medicine has shown that "the government pays for it", directly or through intermediaries, leads to an explosion in prices.

*If anyone here doesn´t know enough of cost accounting, I´ll be happy (seriously! I´m going to have an exam on that in a week and need any chance to practice that I can get) to explain what fixed costs are and how they affect price calculations.
 
TragicMonkey said:
This is one of the few instances in which I advocate violence. A few dozen corporate fatcats slaughtered in their beds, or torn limb from limb by angry mobs, would chill their ardor for money. Those who put a price on human life drive their own value to zero.
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The greedy people are the owners of the companies e.g. the share holders the corporate officers (at least in the UK) have a legal duty to do their best to protect the investment of the shareholders' company.
 
Chaos said:
...snip...

And the idea that government should subsidize the drug is, to put it politely, not a stroke of genius; European experience with socialized medicine has shown that "the government pays for it", directly or through intermediaries, leads to an explosion in prices.


...snip...
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Really? I thought we (at least in the UK if not the whole of the EU) do regulate prices and our drug costs are less then say in the USA?
 
Darat said:
Really? I thought we (at least in the UK if not the whole of the EU) do regulate prices and our drug costs are less then say in the USA?
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Well from what I´ve heard and seen so far, drug costs in Germany at least are the biggest single cost factor. Germany does regulate prices, but in a way (the details of which escape me at the moment*) that makes it very easy for pharma companies to circumvent it.


*IIRC it went something like, they have, for example, a $5 and a $25 drug that do the same job, so "average market price" for the drug is $15 - only the $5 drug is only a protected brand name that isn´t actually produced, so the real price for the drug is $25, but since only the (in reality, completely meaningless) average price is regulated, the provisions that the average price should not rise above $15 doesn´t have any consequences.
 
I was just looking into the issue my self and spotted this hot off the presses (well the Internet and yesterday but you get my drift):

http://today.reuters.co.uk/news/new...6_RTRUKOC_0_UK-BRITAIN-OFT.xml&archived=False

...snip...

The OFT launched a probe last September into the Pharmaceutical Price Regulation Scheme (PPRS), which regulates prices of medicines and the profits manufacturers can make on sales to the state health service.

...snip...

The last PPRS arrangement was agreed between industry and the Department of Health in November 2004 and is due to run until 2010. Under that deal, companies agreed to a 7 percent cut in drug prices.

...snip...
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With that agreement in mind I think it is reasonable to draw the conclusion that the NHS pays less on average for the drugs it purchases then those systems in a "free market" (which as people have pointed out is a misnomer for the pharmaceutical trade).

ETA: That is of course not to say that the drug bill itself is not excessive and the pharmaceutical companies are making huge profits - the costs of drugs in the NHS has risen by 46% since 2000SOURCE
 
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Badger said:
I think you're wrong. It is a free market, in a sense. But I used the word Extortion in my post above.

"Pay me $100K for this drug that will let you live" is not all that different from "Pay me $20k or I break your knees" "Pay me $500/wk so that no accidents happen to your business." in my opinion.

If they're the only show in town, I guess they can ask the $100k. It's only a matter of time before some other show appears in town, and undercuts them.

The ransoming of people's lives for exhorbidant amounts of money is what I find distasteful. I don't mind if they make a profit, but I do mind when it's an obscene profit based on other people's misfortune.
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That's not your opinion, that's just factually wrong. "Pay me $100k for this drug that will let you live" is quite different then saying "pay me $20k or I break your knees". If the entity who put that drug on the market didn't exist, you'd simply be dead. If the entity breaking your knees didn't exist, you'd simply have good knees. It's a big difference.

If life is so important, shouldn't we reward the people who are protecting life by investing in the resources needed to start these endevors? People who save lives but expect to be paid aren't unethical terrible humans who should be shot, people who clamor for the deaths of those who provide us life saving drugs are terrible unethical humans with no sense or reality or reason.

If you are dying, and someone saves your life, don't you think they deserve everything you can give them? No one is profiting off of other people's imfortune, they're profiting off of saving people from misfortune.
 
CaptainManacles said:
If you are dying, and someone saves your life, don't you think they deserve everything you can give them?
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So they save your life only if you have $100,000 to spend. If you only have $50,000 to your name you die. How would you feel if you then discovered that the actual cost of saving your life would only have been $25,000? You could have paid to have your life saved and still given them up to 100% profit.

I agree that drug companies should be paid, but in my opinion they shouldn't artificially hike the price just because there is no competition. It's not like they're selling luxury goods.
 
I liked the $21 mm donation these guys made. If my maths are correct that translates to providing the drug to 210 people.
 
Cain said:
It's actually not a free-market because the patent -- a temporary, government granted monopoly -- poses a barrier to entry. In a "truly" free-market we wouldn't have any intellectual property at all: firms and individuals could produce whatever they wanted, and consumers would discriminate on the basis of price and quality. The best rationale for the fiction of "owning" an idea is that it generates incentives for people to do things that they would not otherwise do. Interestingly this device could reasonably be considered a form of "social engineering" -- that nefarious boogey term that frightens conservatives and libertarians. The intention behind it in the case of the writers of the U.S. Constitution was to "promote the progress of the arts and sciences." Since the purpose is utilitarian there's no principled reason why the government couldn't legislate against this company's pricing policies.
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Of course in a truely free market, we wouldn't have any new drugs. :rolleyes:
 
The Central Scrutinizer said:
You forgot to post your link to that fascinating "fact".
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http://www.kff.org/insurance/7031/ti2004-1-21.cfm

...snip...

For every year from 1995 through 2002, the pharmaceutical industry was the most profitable industry in the U.S. Since 2002, however, its profitability has declined, with drug companies ranking as the third most profitable industry in 2004 (15.8%), with mining, crude-oil production the most profitable industry (22.1%). Drug companies were three times more profitable than the median for all Fortune 500 companies in 2004 (15.8% compared to 5.2%).

...snip...
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The Central Scrutinizer said:
So?
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I would think the point is that people don't seem to think it is a good argument as to why drug companies are "justified" charging so much so that the "failed" advertising campaigns can be funded from the results of the successful ones. (However I do not have any figures that support the claim that they do in fact spend more on advertising then they do on R&D.)

ETA - this site appears to have some interesting facts and figures about drug companies' R&D budgets (caveat I have just found the site and it appears to be a non-industry funded lobbying group).
 
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