Quote:
Originally posted by Say_hello_for_me
I heard a lot of concerns from pharma lawyers this week about this stuff. How did we get to the point where our companies are selling stuff overseas at a lower profit than they sell it here? Was this negotiated by our administration and, if so, did our allies threaten to otherwise copy the drugs if we didn't sell it on the cheap? I'm serious, as I don't know the answer. To restate the question, what was Canada and Europe's negotiating position in this?
If they took the position that they would copy and/or ignore intellectual property, than along with defense spending, I think we've been given more than enough reason to start fighting back against the socialists and other freeloaders. But I may be wrong insofar as I don't know how we got to this point...
Hello
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Driving reasons for lower prices overseas:
(1) centralized purchasing: in most foreign countries there are one to a handful of centralized purchasers, each of whom has significant bargaining power. In a number of cases, information on the outcome of pricing negotiations is published, making the market more efficient.
(2) regulation: there are foreign countries where regulators simply won't permit a drug to be priced very high, and you get a choice of going into the jurisdiction with a low price or not going in at all. In Canada, for example, the price of drugs that are still under patent is heavily regulated.
(3) culture: here, there is often a premium for the latest thing. In other countries, premium pricing more often goes to proven drugs with a high clinical efficacy. Note that the US often prices generics below what those in other countries will pay.
(4) costs: US liability costs are usually higher, as are US marketing costs (we can talk about how pharmas market drugs another time), and often a lot of the distribution costs as well.
(5) demand: drugs get priced like airplane seats - you charge what you can for them, even if people sitting next to each other end up paying radically different prices. Countries that are less well-off tend to pay less. Since the biggest costs relating to pharmaceuticals are R&D and marketing, it's pretty easy to offer different prices in different markets as long as you have a market like the US where you can price them high enough to pay the R&D nut.
Bottom line: if we do find some ways to reduce pricing here, we'll probably drive prices up elsewhere since then other countries will have to help cover the R&D nut. Right now, I'm told pharmas often budget drug development based almost exclusively on the US market and their ability to recover the R&D from our market.
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