# With friends like us, what do the UK and Canada need with enemies? **URL:** \ **Category:** The BBQ Pit\ **Created:** [August 23, 2009, 10:56pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433 "2009-08-23T22:56:41Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![The\_Tooth](https://avatars.discourse-cdn.com/v4/letter/t/c67d28/32.png) [@The\_Tooth](https://boards.straightdope.com/u/The_Tooth)\ **Post date:** [August 24, 2009, 9:17pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/81 "2009-08-24T21:17:07Z")
> [@mswas](#): > > But the drugs are produced at all because of their massive profits IN AMERICA. So pharmaceutical companies would forfeit the profits gained from charging us more by charging you less. They would not prefer to increase profits by charging us what they charge you. The reason for this is because the drugs are produced in America where their profit comes from. Do I understand your argument? ---
**Author:** ![Gary\_Kumquat](https://avatars.discourse-cdn.com/v4/letter/g/4491bb/32.png) [@Gary\_Kumquat](https://boards.straightdope.com/u/Gary_Kumquat)\ **Post date:** [August 24, 2009, 9:17pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/82 "2009-08-24T21:17:29Z")
> [@mswas](#): > > But the drugs are produced at all because of their massive profits IN AMERICA. Is their any chance you could read any of the cites given, and then shut the fuck up with this bullshit. Either that or accept that this topic, along with the various background info posted, is about 5 or 6 years of school beyond whatever level you started to resit at and never got past. The USA does not subsidize healthcare or medication for any other country. Fair enough, you’re a fucking idiot who is happy to be reamed, that’s your choice. Trying to justify your submission to such treatment by claiming it’s for the benefit of others is somewhere between pathetic and worse. ---
**Author:** ![The\_Tooth](https://avatars.discourse-cdn.com/v4/letter/t/c67d28/32.png) [@The\_Tooth](https://boards.straightdope.com/u/The_Tooth)\ **Post date:** [August 24, 2009, 9:22pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/83 "2009-08-24T21:22:18Z")
Sorry, I meant “They would not prefer to increase profits by continuing to charge you what they now charge us.” ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [August 24, 2009, 9:25pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/84 "2009-08-24T21:25:15Z")
> [@The\_Tooth](#): > > Do I understand your argument? No, he’s saying that drug makers will no longer spend the same amount on R&D because they won’t have the same profit margins any more. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 24, 2009, 9:32pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/85 "2009-08-24T21:32:15Z")
> [@The\_Tooth](#): > > So pharmaceutical companies would forfeit the profits gained from charging us more by charging you less. They would not prefer to increase profits by charging us what they charge you. The reason for this is because the drugs are produced in America where their profit comes from. I am saying that if the prices of drugs were normalized the Canada’s drug prices would increase. The average drug price of North America is higher than what Canada pays because America vastly outnumbers Canada and pays more. > [@](#): > > Do I understand your argument? I’m not sure. **Gary Kumquat** The drug companies would clearly like to charge more in Canada than they currently do. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 24, 2009, 9:33pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/86 "2009-08-24T21:33:16Z")
> [@Really\_Not\_All\_That\_Bright](#): > > No, he’s saying that drug makers will no longer spend the same amount on R&D because they won’t have the same profit margins any more. That too. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [August 24, 2009, 9:35pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/87 "2009-08-24T21:35:48Z")
> [@mswas](#): > > I am saying that if the prices of drugs were normalized the Canada’s drug prices would increase. The average drug price of North America is higher than what Canada pays because America vastly outnumbers Canada and pays more. Canadians pay less because the legal situation in Canada re drug marketing is quite different in many respects. ---
**Author:** ![Gary\_Kumquat](https://avatars.discourse-cdn.com/v4/letter/g/4491bb/32.png) [@Gary\_Kumquat](https://boards.straightdope.com/u/Gary_Kumquat)\ **Post date:** [August 24, 2009, 9:37pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/88 "2009-08-24T21:37:06Z")
> [@mswas](#): > > **Gary Kumquat** The drug companies would clearly like to charge more in Canada than they currently do. Well fucking spotted, Sparky. They would like to gouge Canadians as much as they gouge Americans, but Canada’s laws do not allow that. In theory, if you lived in the present day version of Deadwood, someone could arserape you because the laws allowed it. Would you then advise the citizens of whatever nearby town that you had endured this on their behalf, and frankly they owed you for your suffering? Well, you…possibly so. You are an idiot. ---
**Author:** ![The\_Tooth](https://avatars.discourse-cdn.com/v4/letter/t/c67d28/32.png) [@The\_Tooth](https://boards.straightdope.com/u/The_Tooth)\ **Post date:** [August 24, 2009, 9:41pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/89 "2009-08-24T21:41:02Z")
> [@Really\_Not\_All\_That\_Bright](#): > > No, he’s saying that drug makers will no longer spend the same amount on R&D because they won’t have the same profit margins any more. I do not think that would be the case. I don’t buy that drug companies would voluntarily lower US prices, thereby reducing their profits. Do you? ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 24, 2009, 9:43pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/90 "2009-08-24T21:43:06Z")
> [@Malthus](#): > > Canadians pay less because the legal situation in Canada re drug marketing is quite different in many respects. Yes, I read your post. ---
**Author:** ![The\_Tooth](https://avatars.discourse-cdn.com/v4/letter/t/c67d28/32.png) [@The\_Tooth](https://boards.straightdope.com/u/The_Tooth)\ **Post date:** [August 24, 2009, 10:13pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/91 "2009-08-24T22:13:34Z")
> [@mswas](#): > > I am saying that if the prices of drugs were normalized the Canada’s drug prices would increase. Yes. If things were different, they wouldn’t be the same. If prices went up, we’d pay more. Can’t argue with that! > [@](#): > > The average drug price of North America is higher than what Canada pays because America vastly outnumbers Canada and pays more. That you pay more because your prices are higher is certainly true. The reason your prices are higher is not because of our population, but because we negotiated lower prices. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 24, 2009, 10:24pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/92 "2009-08-24T22:24:27Z")
> [@elbows](#): > > “Um, American’s pay more for their meds because they have a ‘for profit’ model for health care.” We also have a ‘for profit’ model for food, but I don’t see that groceries are that much more expensive than the rest of the world. And we have a ‘not for profit’ model for our military, and that is not particularly cheap. See also the US Postal Service vs. FedEx, police vs. private security guards, etc. It seems more than a little problematic to simply assert that a ‘for profit’ model always automatically leads to disaster. Regards, Shodan ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [August 24, 2009, 10:26pm UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/93 "2009-08-24T22:26:21Z")
> [@Shodan](#): > > We also have a ‘for profit’ model for food, but I don’t see that groceries are that much more expensive than the rest of the world. And we have a ‘not for profit’ model for our military, and that is not particularly cheap. > > See also the US Postal Service vs. FedEx, police vs. private security guards, etc. > > It seems more than a little problematic to simply assert that a ‘for profit’ model always automatically leads to disaster. > > Regards, > Shodan I agree. In most situations, “for profit” leads to greater competition, higher efficiency and thus lower prices to the public. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 25, 2009, 12:09am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/94 "2009-08-25T00:09:34Z")
> [@The\_Tooth](#): > > That you pay more because your prices are higher is certainly true. The reason your prices are higher is not because of our population, but because we negotiated lower prices. Which the Pharmaceutical companies agreed to because they knew they’d get more from America. If your research costs are high and your production costs are low, then if you have one customer that covers all of your research costs then you can charge other people lower and still come out ahead of the production costs. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [August 25, 2009, 12:30am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/95 "2009-08-25T00:30:12Z")
> [@mswas](#): > > Yes, it is. The drug companies charge cheaper prices in the rest of the world because they make so much in the American market. Holy shit, you’re serious? Explain to me why they’d do that. I mean, provide for me the logic of such insanity. Drug companies charge, in the United States, the profit-maximizing price. Nothing else. It doesn’t matter what Canadians pay. The profit-maximizing price in the USA is determined by supply and demand. It would not matter if Canadians paid the same, half as much, or twice as much. The market-clearing price in the USA is what it is; you can’t simply raise prices to “make up” for prices in some other country, or else they’d raise the prices anyway. If you’re DrugCo, what price are you going to charge for Profitzam in the USA? Why, youre going to charge whatever price you think will mazimize your margin. Not a penny more, and not a penny less. Suppose the Canadian government forces you to lower your price in Canada by 15%. Will that change the price you charge in the USA? Obviously not, because _you’re already charging the most profitable price._ If you raise your prices past the ideal price you’re going to lose more money, not gain it. You can’t make up profits lost in one group of customers by jacking prices up against another beyond the market-clearing price. Life does not work that way. If you could just make more money by raising prices, Hershey would charge a million dollars for a candy bar. They don’t do that because - surprise, surprise - in a free market, there’s an ideal price at which raising OR lowering prices w3ill cause you to lose money. That’s where American drugs are priced. > [@](#): > > And you honestly believe that if America were paying Canadian prices it wouldn’t raise the prices worldwide? Why would this cause Canada to agree to raise prices? Drug companies would simply make less money, and I’m not sure that’s a good thing by any means. > [@](#): > > Actually that’s precisely how it works. They charge cheaper worldwide based on what the market will bear there while we get gouged. They provide Canada with those benefits because the country negotiates drug prices as a whole, obviously. So you’re now saying the price is whatever the market will bear. Okay. I agree - the price is whatever the market will bear. Raising prices in the Canadian market won’t change what the American market will bear. Again, I have to ask; if Pfizer starts making more money in Canada, do you really think they’re going to give the money back to you in the form of prices that are below market value? Why would they do that? ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 25, 2009, 12:33am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/96 "2009-08-25T00:33:43Z")
> [@RickJay](#): > > Holy shit, you’re serious? Explain to me why they’d do that. I mean, provide for me the logic of such insanity. Do you even understand the first thing about pricing? Like at all? You’re not trying to make a profit off of individual units, you’re trying to make a profit over the average of all production. As long as the research cost is covered by one market then any ancillary markets need only be above production costs to be profitable. As that seems to be beyond your understanding responding to the rest of your post is unecessary. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [August 25, 2009, 12:41am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/97 "2009-08-25T00:41:25Z")
> [@mswas](#): > > Do you even understand the first thing about pricing? Like at all? You’re not trying to make a profit off of individual units, you’re trying to make a profit over the average of all production. Um, no. You are not just “trying to make a profit over the average of all production.” You’re trying to _maximize_ your profit, and understanding the concept of marginal profit - profit for individual units, in other words - is critical to understanding how profit is maximized, or you’d just be pissing money away, since you could make an overall profit but be losing potential profit by not pricing correctly. You might also want to look up “price discrimination,” that being a key concept in this particular discussion. I’m being wholly sincere when I say that what you’re saying defies logic, and yes, I do understand a little bit about pricing, this being what my education is in and all that. I don’t think you’ve actually thought this through, and with respect, I think you might want to TRY to reply to my post, because unless you can answer the questions I’m raising you have some pretty gaping holes in your claim. But let me see if you can just answer one: **If Canadians started paying more, why would drug companies charge Americans less? Why would they voluntarily give up profits in the USA because they were making more in Canada?** ---
**Author:** ![The\_Tooth](https://avatars.discourse-cdn.com/v4/letter/t/c67d28/32.png) [@The\_Tooth](https://boards.straightdope.com/u/The_Tooth)\ **Post date:** [August 25, 2009, 1:00am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/98 "2009-08-25T01:00:36Z")
> [@mswas](#): > > Which the Pharmaceutical companies agreed to because they knew they’d get more from America. They agreed to it because they were faced with two choices from us: less profit than from Americans; no profit from us. > [@](#): > > If your research costs are high and your production costs are low, then if you have one customer that covers all of your research costs then you can charge other people lower and still come out ahead of the production costs. Why would they do that? I still don’t buy this idea that pharmaceuticals want to limit their profits, and that any more profit we provide will be reflected in lower prices for you. No, it’s not our fault you’re letting yourselves get screwed over, it’s yours. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 25, 2009, 1:11am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/99 "2009-08-25T01:11:47Z")
> [@The\_Tooth](#): > > They agreed to it because they were faced with two choices from us: less profit than from Americans; no profit from us. > [@](#): > > Why would they do that? I still don’t buy this idea that pharmaceuticals want to limit their profits, and that any more profit we provide will be reflected in lower prices for you. No, it’s not our fault you’re letting yourselves get screwed over, it’s yours. Because that’s how EVERY business that has ever existed works. I don’t buy that pharmaceutical companies want to limit their profits either. That’s some shit you pulled out of your ass. ---
**Author:** ![mswas](https://avatars.discourse-cdn.com/v4/letter/m/e99b99/32.png) [@mswas](https://boards.straightdope.com/u/mswas)\ **Post date:** [August 25, 2009, 1:14am UTC](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433/100 "2009-08-25T01:14:01Z")
> [@RickJay](#): > > Um, no. You are not just “trying to make a profit over the average of all production.” You’re trying to _maximize_ your profit, and understanding the concept of marginal profit - profit for individual units, in other words - is critical to understanding how profit is maximized, or you’d just be pissing money away, since you could make an overall profit but be losing potential profit by not pricing correctly. You might also want to look up “price discrimination,” that being a key concept in this particular discussion. Yes, but as has been pointed out they take the lower profit from Canada because they have to do to Canadian protectionism. But it’s still profitable because the US is covering their research costs. > [@](#): > > I’m being wholly sincere when I say that what you’re saying defies logic, and yes, I do understand a little bit about pricing, this being what my education is in and all that. I don’t think you’ve actually thought this through, and with respect, I think you might want to TRY to reply to my post, because unless you can answer the questions I’m raising you have some pretty gaping holes in your claim. But let me see if you can just answer one: > > **If Canadians started paying more, why would drug companies charge Americans less? Why would they voluntarily give up profits in the USA because they were making more in Canada?** No, they wouldn’t, but if Americans started paying less they’d certainly try to charge Canadians more. [Previous page](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433.md?page=4) [Next page](https://boards.straightdope.com/t/with-friends-like-us-what-do-the-uk-and-canada-need-with-enemies/507433.md?page=6)