If the Congresswomen does not want them to profit, then the government can buy them out. She can submit the bill.
Until then, they do not answer to her, they answer to their shareholders, the FTC and the SEC. Their shareholders- which can be you, if you want- seem to like the “obscene” profits.
Note that without these companies we would not have had no less than three vaccines for this pandemic in record time.
This is capitalism. It works better than any other system. It is, however, not without it’s flaws. I do not like the fact that the company makes such profits.
However, if you look at the actual profits that the company reports, it is not that obscene:
Current and historical gross margin, operating margin and net profit margin for AbbVie (ABBV) over the last 10 years. Profit margin can be defined as the percentage of revenue that a company retains as income after the deduction of expenses. AbbVie net profit margin as of March 31, 2021 is 10.28% .
It was not “these companies” that came up with the vaccines. Pfizer is a German company. Moderna is an American company, but obviously the vaccine was developed faster – and even slightly better – in a country that does not run their health care system exclusively by profit. Pfizer did not even take the incentive money offered by the Trump Administration. Your statement is untrue.
I disagree that capitalism works “better than any other system.” I think countries that combine capitalism with a realistic view of its shortcomings do much better than we do in administration of and access to health care.
Definitely interesting to peruse the graphs in your cite, to see how much their net profit margin has come down in 2021, isn’t it?
However, I notice you had nothing to say about the severe slide of their net profit margin starting in 2021. Their profits were much higher during most of the Trump Administration, weren’t they?
How dare you say something like that out loud! Don’t you know that capitalism was handed down to us by god in it’s true and perfect form? Any meddling is an abomination. And any talk of the “flaws” of the system is sacrilegious and can only lead to the downfall of society as we know it.
The infallible stockholders cannot, by definition, be wrong or greedy. Now hush your mouth and get back in the kitchen!
Yes. I hope that was clear.
It pisses me off when people use the old “but that’s how capitalism works, why are you surprised?” Yes, we know that’s how capitalism sometimes works and we’re not surprised by it. Were saying that’s not how it always works and we wish it never did. By pointing out that most of your potential customer base considers them to be a greedy demon we hope they’ll do the right thing and rethink their priorities. And if not, well then we’ve started the discussion about what public interventions are necessary, so fair warning.
There are plenty of other avenues available to congress to address this situation that don’t involve nationalizing the pharmaceutical industry. And, of course, determining which, if any, of these remedies is appropriate requires an investigation into the finances and operation of the companies in question - precisely as Rep. Porter is doing.
I’m not troubled by the profits. A corporation is supposed to make profits, and labeling some more “obscene” than others can get pretty subjective.
What bothers me is the stock buybacks. They create no value and have no purpose beside driving the stock price higher. They’re just an admission that a company literally has more cash than it knows what to do with – and if that’s the case, they can’t legitimately claim a need to raise prices on a drug whose cost to manufacture has not increased.
In response to you, large pharmaceutical companies have somewhat of a moral obligation to justify their pricing because of the importance of drugs and the government’s grant of a patent. It’s part of the unwritten social contract that pharmaceutical companies shall not extort the people, and in return, the people shall provide funding, letters patent, certifications, &etc.
This particular episode partially undermines a common argument that pharmaceutical companies justify their pricing with research and development costs.
This was not addressed specifically to Aspenglow, but to everyone here who thinks Porter was right and 10% is obscene. let me know what ideas you have.
Have you read the whole thread?
You’re misunderstanding Porter’s argument. It’s not that 10% (or whatever it actually is) is an obscene amount of profit. It’s the accounting used to get to that number that’s obscene. Abbvie claims that a 470% increase in the price of one of it’s drugs is justified because of increases in their R&D budget. The “cost of doing business” defense. But Porter claims that the the company is including a ridiculously high advertising budget, a ridiculously high executive bonus compensation, a ridiculously high stock buyback cost, and a ridiculously high mergers and acquisitions cost (that was essentially Abbvie buying out it’s competition) into what it calls R&D. Basically, everything but actual R&D.
It’s known as creative accounting. These things don’t actually increase the price of the drug in question. The company just makes it look like it does.
Sure. One very simple one is to ban direct-to-consumer advertising. There is no reason my 6-year-old should know the name of 5 different RA drugs, other than that drug companies understand that they can get patients to demand their doctor prescribe them (instead of the cheaper alternatives).
But @mikecurtis is absolutely right - nobody is saying 10% is too high. Folks are saying that when your expense ledger includes things like stock buybacks and massive advertising budgets it is fair to ask to what extent the taxpayer is being asked to fund your profits (and share price).
