Simple. Supply, meet Demand and standard Econ Monopoly Theory.
Step 1. There was previously no generic (that’s why there’s an article, because the government just approved the generic for sale), so Bayer was able to charge a monopoly price to maximize return. Apparently that’s how the math worked out (supply, demand, elasticity, etc). Anecdotal theories of “that doesn’t make sense” don’t change the math. In fact, brand names often charge high prices even when there are generics as there can be enough brand loyal people paying more to offset lower sales volume. This is a standard example taught in any economics class.
E.g. With a 50 cent unit production cost would you rather have 1 customer pay you $10 MM or a million customers paying you $1 each. You can argue morals in medicine, but economic theory usually trumps. Yes, there are longer term considerations as well, but you can bet all the big pharmas have the time, experience, and intellectual horsepower to run the numbers and choose the optimal strategy from their perspective.
Step 2. India approves the generic for production, breaking the monopoly.
Step 3. Presumably this will force Bayer to lower it’s price since it will no longer have a monopoly (the article only mentions Bayer’s current price, which is irrelevant to compare to the generic’s because the generic is not yet on the market since it just got approved). Once the generic starts actually making sales, Bayer will probably adjust it’s price.
No so fast on Step 3. Some countries have problems getting the generic drugs from India because of WTO regulations. Thus, those poor countries either have to break a patent to allow for the generic drug to be produced or break trade agreements and get it from India.
R&D and getting FDA approval can literally take a decade for one drug. So, there is that much more cost to recover for Bayer or Pfizer or whatever brand compared to generic producers.
Fair enough on that. I was only opining on the Bayer price in India, not on the price other countries without access to the generic from India might expect, but didn’t specify that in Step 3. Generally, I’d expect anywhere they have a monopoly, Bayer will charge a monopoly price until some other market force comes to “bear”
