Posted on 01/22/2004 7:29:26 PM PST by maui_hawaii
Here is my assessment:
They are not. Not in reality.
Right now youre probably sitting there thinking, Whoa, thats totally different that everything Ive heard or its cheaper for me, so its cheaper. Let me explain why I am right.
The difference is social systems (namely socialism) and trade policy. Those are the two biggest factors.
Imagine you are a drug manufacturer. What is your largest cost? Is it manufacturing? Not a chance. Your biggest cost is by far development of newer and more cutting edge drugs. The actual manufacturing could be pennies on the dollar in comparison. Quite often the actual manufacturing is farmed out to local manufacturers in the host country. They arent really selling the drugs across the border, but rather the know-how to a contractor in say Canada or Europe.
Because of our system we have taken a lead in developing new drugs. The vast majority of medicine and medical practices are developed here in the US. Why? Because can afford (and do spend money on) the R&D costs.
Now lets say you develop some really good cancer treatment drug (a fictional example) and it cost you billions in development. Because of the dominant view that drugs are developed for the good of mankind, the drug companies sell drugs in places like Canada where they literally cap what they can be sold for.
What ends up happening is the foreign markets actually in many ways drive up the costs of our prices at home, in other ways they kind of drive down prices. More of the former than latter. Let me explain that seeming contradiction.
First off, one MUST recoup costs of development. Those billions are spent on your cancer drug no matter what.
In a purely Canadian system it would take 100 years to recoup the R&D costs of your new drug, if ever. Its because of price controls.
If the US adopted the socialist price control system it would completely bankrupt the entire industry in less than 10 years thus making everyone worse off. It would happen also if we allow the importation of drugs. 2+2=4.
The R&D costs MUST be recouped one way or another, and the quicker that happens, the faster we get more and better drugs. We are looking at turn-over. One wont reinvest money they dont have or have not yet gotten back. Who will pour money into a money losing venture?
Here is how Canada (and others) drive up our drug costs: because of their system they force US consumers to foot the bill of R&D costs. Those costs are simply spread over less consumers. We have a smaller market (compared the entire world) that is the one actually paying for the R&D. Our cancer drug costs are simply not allowed to be priced in globally. They quite literally force us to pay for our own R&D and recoup the costs all by our lonesome (that THEY are benefiting from). Our companies are not allowed to price drugs internationally so that the R&D costs are spread out among more of the people that actually consume the product. We are not allowed to treat foreigners as actual market participants.
In short, the US consumer is subsidizing everyone elses right to have drugs. If the global drug market was not segmented, on average the US consumer would pay 60% less and everyone else would pay 25% more.
How they drive down costs is that what little they do contribute financially does help the drug companies. Its still though an unfair system. The international markets want something for nothing. If we cut them off from the pot we are SOBs. If we make them pay for what they get we are SOBs. Its a lose-lose situation.
If the US companies refuse to supply their markets everyone does what China threatened to do: Go buy a few bottles in the US, reverse engineer and manufacture the drugs on their own. Then the drug companies get NOTHING and all patents are disregarded. In other words the drug companies are trapped in the system.
The US is the only place in the world where the costs of drug development can be recouped. Thats the simple truth of it. If that market goes, the whole industry dies. That is why the drug companies are so opposed to drug importation. It would in essence Canada-fy our drug market and seriously stifle the development of drugs.
We dont want that.
Instead of complaining about the drug companies maybe we should complain about the socialism overseas. Truth is, if you are American, you are paying for some old Canadian ladys drug bill. Thats what it amounts to.
Many here have already made GREAT points.
I don't know about the outline, but your response( Why don't you make a relevant comment.) seems a little rough. Why don't you just post a finished product, and stop soliciting help.
Of course I made it up. I said that from the get go. I am trying to use a representation to describe a theory.
Don't go into the 'you're hiding' type stuff.
I am flat out saying that I don't know and want other people's input so I can form a better opinion.
There might be a doctor here, or a researcher, or many others here that could tell me things I don't know.
I won't apologize at all for soliciting 'help'.
Sorry if the response offended you. Sounded to me like you were attacking me for an honest question.
If my theory can be ammended by using real numbers, please do so. By all means.
This isn't all that far off from what I am thinking.
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