In this case it’s a response to price controls in other countries artificially forcing cost shifting to US consumers. That’s not the case for the price differences you discuss, which are the result of things life varying costs, regulations, taxes, etc.
That’s not to stop the California people from giving that a shot. But they might just end up with no one willing to sell them any gas - the point is that it does cost more to sell it in CA.
You know what - you convinced me - in the interests of fair trade. Yet, at least according to this paper the benefit to US consumer would be small - only around $5-7B/year. The benefit to R&D for US companies would be higher.
I would bet you a trillion dollars that would not happen.
You would see some combination of companies separating their US interests from their foreign interests, US companies offshoring their production or country they are domiciled in, re-branding products slightly different so there is no same product being sold in different locations, etc, and some unknown number of products never developed because the incentive to create them has disappeared.
I don’t see how this is possible. The drug/device was developed by Company A, and they own the patent on it. Either they sell it themselves in multiple countries or they license it to “someone else” in multiple countries, but either way they have control of it.
Once it’s sold or licensed to another company, they’ve now satisfied your requirement that has price equity across countries. The separate companies are separately selling the same product and there is no longer any disparity.
Company A has the patent and manufactures the drug. It has a subsidiary B in the US to which it sells the drug at $30 and the subsidiary sells it for $60 - in the US. It has subsidiary C abroad to which it sells the drug at $30 (due to rules you want to institute) and the subsidiary sells it for $35.
If you were talking about the market for most consumer goods, I would agree. But it’s effectively impossible to hide what your drug is by changing the name or slightly changing its formulation, because the FDA controls access to the market so tightly.
For one thing, drug companies already have to disclose all variants sold in foreign markets during the approval process so that the FDA can see how it’s worked there and whether it’s killed anybody and so on.
Terr’s scenario doesn’t work, because the FDA (or whatever agency is put in charge of implementing this rule) can simply regulate the price charged to the end user.
However, we would end up with a race to the bottom where the countries with the lowest price controls would lose access to all modern drugs - because Pfizer will have to withdraw Viagra from sale in Bhutan if Bhutanese price controls mean it can only be sold for $1.50 in the US (for example.)
No, the law specifically extends the ban to all subsidiaries and licensees. The actions of these subsidiaries and licensees can be controlled by the owners of the patent.
Really this all seems to me like quibbling about details that can be easily worked out. Perhaps there are complications that I can’t think of, but this doesn’t look like them.
Huh? It can regulate the company’s price for selling it to the subsidiary. It has no control over the foreign subsidiary whatsoever.
Or raise their price controls, so that they share the cost with others.
Sure, but you’ll find that most foreign markets aren’t willing to bear a great deal more than they already pay with price controls. It’s also worth noting that the drugs are still profitable at the depressed prices being charged.
It doesn’t have to control the foreign subsidiary. All it has to do is require the domestic seller to sell at the same price as the foreign subsidiary.
Ok. Can the foreign subsidiary, once it receives the drugs, change their pricing?
Also, “profitable” does not equal “covers R&D”.
The French subsidiary sells Boner Pill XYZ at $5/pill, because that’s what France tells them they’re allowed to sell it for. The UK sub sells them for $4.50, the German sells for $5.50.
The US firm is not allowed to sell it for any more than $5/pill because that’s the average of the Europe pricing, and that’s the maximum price Boner Pill XYZ is allowed to be sold for in the US. The US isn’t telling Pfizer what Pfizer’s price is, and letting them get around it by creating a subsidiary. They’re setting a price for Boner Pill XYZ, regardless of who is authorized to sell it.
They can do whatever they like, naturally. Of course, that will affect the parent company’s right to sell the drug in the US.
Sure it does. Have you ever wondered why drugs are so often launched outside the US first, even though we are the largest market? It’s because it costs a hundred times as much to obtain FDA approval as it does to receive type approval even in other highly regulated Western economies (like the European Medicines Agency.)
We all require all sorts of idiotic trials that other countries don’t. Most of these are because of Republican sacred cows - like testing Alzheimer’s drugs to make sure they aren’t abortifacients - but I’m sure that are Democratic oxes that could use goring here too.
If you eliminate the US market, you eliminate a substantial portion of the R&D costs. But as I’ve already pointed out, drug development costs are an insignificant fraction of US healthcare spending and really not relevant to this discussion. They’re like tort reform.
You think complex transfer pricing arrangements and efforts to optimize profits are details that can easily be worked out? That seems very naive.
There’s no requirement that the foreign and domestic companies have a parent/subsidiary relationship. They could be arms length.
The two entities would not be parent/subsidiary.
Changing the name is only one of many options. Who says the product being changed would be in the US? The US product can be unchanged, and the foreign product can be different in fact or in appearance after it’s satisfied FDA approval.
Btw, any comment on the cite you provided earlier on the R&D costs? I’m curious since I expect it to be much higher than $50B which you claimed earlier. Your cite directly contradicted this claim.
Would it be possible for you to describe what these “terrible costs” might be? And if so, would you list them?
Also, when you say “generally wrong to require others to pay”, do you mean just for health care, or for everything that may require others to pay in order to provide a service that some who pay won’t utilize?
Doesn’t matter what relationship they have. If any entity is selling Drug X for $5 somewhere, then it can’t be sold for more than $5 in the US.
I didn’t see your response to that, sorry. I think you’re right and I read it backwards, but I’ll have to look again. The numbers are basically the same as the ones I’ve seen from CMS in the past.
The general cost I’m picturing is an erosion of the strongly American attitude that people should take care of themselves - the “spirit that conquered the West,” if you will. I believe that there is a trend unique to the United States that catapulted us into being a world power that’s grounded in that sort of belief in and reliance upon individualism, and every step we take that enervates our individualism is most likely detrimental.
I believe that the default assumption for everything should be that people are responsible for their own costs, and that a high showing of need and utility is required to overcome it.
In my view, we weaken ourselves when we create public schemes that foster dependence.
You think that our government is unable to figure out that the new drug a company wants to sell here is also being sold somewhere else for less? Because they changed the name of it, so we’ll just let it be sold at whatever price the company wants, cuz we is just that fuckin stupid.
Somehow the braniacs running France manage to get the same drug for half the price. I guess the drug companies really like France, since they don’t try any trickery to get higher prices there. They would only do that in the US, where the government is filled with idiots. Seriously, the FDA would love to pour the water out of that boot, but the directions are written on the heel, where they can’t read them.
In that case they get a choice of buying it or not, like anyone else. No reason they alone get to freeload.
They’re profitable on a marginal level. Not necessarily if you include all R&D costs.