No, that’s what lowering the prices they charge you would do.
I suppose they could reduce their marketing budgets so as to wring the same amount of profit from less revenue. That would be nice. But I can’t say I’ve ever seen a business out to reduce its revenue.
Yes.
I don’t even understand who you are arguing with because you’re arguing against something I never said.
RickJay apparently does. You apparently don’t.
You’re trying to maximize your profit from every unit. The US price is what it is because that’s what the US market will bear.
If the Canadian price was higher, the US price wouldn’t drop. The pharmaceutical companies aren’t going to give up their profits voluntarily, because they have no incentive to do so.
There is no reason for the demand curve in the US to change, unless you’re talking about implementing Vittier’s “buy Canadian drugs 'til Canadians croak!” strategy, which as already noted is a non-starter.
We’re not discussing “protectionism.” That economic concept is completely unconnected to this discussion.
The US is not “covering their research costs.” Everyone’s covering the research costs if the drug works, makes it to market, and is a good seller; the drug companies make a profit from all the markets they choose to sell in, or else they would not sell there. They don’t designate profit from one market to research and profit from another to marketing and profit from another to covering salaries and the electricity bill. They’re maximizing profit, end of story. If they can charge Americans more than Canadians, of course they will; if they can charge Canadians more than Danes, they will. But all the profit goes into the same pot, and is not necessarily proportional to R&D costs. Viagra was discovered by accident.
(And the US isn’t necessarily more profitable. The prices are higher due to it being a wide open free market, but the government regulatory costs are also the highest in the world. Jumping through FDA hoops costs a fortune. But that’s a separate issue, and varies from drug to drug.)
They’re trying to make Canadians pay more now. Why wouldn’t they? The drug companies work the Canadian government big time, trying to get prices as high as possible. They don’t care what they make in the USA; they want to make more in Canada anyway. For all that the prices are nominally “set” by the government, it is, in actual fact, a negotiation behind the scenes, with lobbying and pressure brought to bear. Why do you think they aren’t doing this already?
You seem to continue to believe that if they make more money in Canada, somehow that will cause them to lower prices in the USA, or vice versa. You haven’t yet explained why any sane business would do something like that.
Yes you are trying to maximize the profit from every unit but you’ll go lower in certain markets and still be profitable if the research costs are bolstered by another market.
Well, your claim implies it. If the only reason you pay so much is because we pay so little, as you say, then it follows from your argument that if our prices were to go up, yours would go down. I humbly disagree and suggest that pharmaceutical companies treat US customers like Ship’s Whore for another reason: they can. And they’d continue to do so regardless of how much they got to charge us.
I don’t know where you are pulling this complete nonsense from. I never said anything remotely resembling this.
I am uninterested in arguing with straw men.
I never said if they raised prices in Canada they’d lower them in the US. I said they lowered them in the US they might raise them in Canada. It might seem superficially the same but being as the subjects are reversed in the word order it changes the meaning completely.
No it doesn’t imply that. You pay so little because we pay so much, not the other way around. We essentially cover their research costs, and they get their profit from the rest of the world.
Do you understand now? It’s your last chance because I’m not going to continue to argue with you when you’re just disagreeing with yourself disconnected from anything that I am saying.
I’ve just entered this thread and haven’t yet read the whole thing, but I’ll post anyway (bad behavior, I know). Pardon me if this has already been addressed:
(Bolded word added by me to fix a presumable typo.)
I think the question is this: If they could make more money from the Canadian market by raising Canadian prices, why wouldn’t they have already done so? Why would they wait for American prices to drop as a precondition to raising Canadian prices, if raising Canadian prices would increase the profit earned in Canada?
If they could raise prices in Canada, they would. THEY WOULD. I mean, unless they are run by demented penguins, they WOULD raise prices if they COULD raise prices.
Nothing about the US would change whether they COULD raise prices in Canada, so nothing about the US would change whether they WOULD raise prices in Canada.
God, the last time I had this conversation it was about baseball ticket prices. I seriously thought that this particular idiocy had been stamped out some time in the 90s.
They might raise them anyway. Why would a lowering of prices in the US specifically result in a rise in prices in Canada?
No, we don’t pay so little because you pay so much. How many times does this have to be explained?
There’s this thing in economics called “supply and demand.” See, mswas, what happens with drug prices in the US is that there’s a supply of drugs, and a demand for drugs, and the price of drugs is set wherever the drug manufacturer will maximize their profit in the US market. That ideal price is determined by supply and demand. It is not determined by what people pay for the drug in Thunder Bay, because that’s a different market.
If Canadians start paying more for drugs, that will not change the price of drugs in the USA. The American prices would remain essentially undisturbed (in fact, they might go up a little, since demand would be raised slightly by some Americans buying their drugs in the USA where before they’d bought in Canada.)
The price you pay for a drug is set by supply and demand and nothing else. It does not matter what Canadians pay; if anything, Canada’s policies result in slightly (very slightly) lower prices in the USA because it slightly reduces demand in the American market. Similarly, it doesn’t matter to Canadians what Americans pay. Canadian prices are what they are because the government caps prices on some drugs. Most drug prices are still determined by supply and demand; in some cases, they’re capped. That wouldn’t change if the US adopted a similar policy. Why would it?
No, you wouldn’t, unless you’re the only severely retarded drug company CEO in the world. Why would a drug company charge less than the market would bear just because they’d covered their research costs? They’ll charge exactly the price that will maximize profits, and nothing else. If the price allowed by the Canadian government is below the market-clearing price, they’ll charge the absolute maximum allowed, pushing the government as hard as they can to get it raised, to get as close to that market clearning price as they can - unless that price is below the marginal cost, in which case they will not sell the drug in Canada at all. They absolutely will not leave money on the table just because they’ve covered research in the US market. What sort of imbecile would run a business like that? It’s crazy.
Drug companies don’t give a shit what their research costs are once the drug’s on the market; they only care beforehand based on a guess as to whether they’ll recover their cost. It doesn’t matter if the drug cost *nothing at all *to research; they’ll charge $1000 a dose if the market will bear it. Reearch is not a marginal cost and the price of the drug has little to do with it. Viagra is the classic example; it was discovered purely accidentally, as a byproduct of developing a different drug. But it’s still relatively expensive, because guys will pay a lot of money to fix limpcock. Pfizer didn’t set the price of Viagra based on the development cost, they set it based on supply and demand.
Similarly, if you had a drug that cost $200 million to research and it was a flop on the market, earning only $100 million in sales, well, you’re out $100 million. You can’t just triple your price if the market doesn’t want it.
You missed my point entirely. Your examples make that perfectly clear.
A ‘for profit’ model for groceries? Everyone has a ‘for profit’ model for groceries, I believe. Which would explain why we all pay about the same for groceries.
Really the post office vs Fed Ex? Why do they run the post office as one large system instead of privatising it and running a bunch of private post offices, do you think? Because costs would rise, in a big way, that’s why.
However, ‘for profit’ health care guarantees two things, higher costs (profit), and limited access (the wealthy and well insured). That anyone can defend it, astounds me.
Remember when your president answered all those pesky questions about how he was going to pay for his health care plan? Remember how he spoke about the extremely large savings to be realized, for instance, in purchasing drugs as one large unit rather than as thousands of small units. It ain’t rocket science. It’s right there in front of your eyes.
You have a not for profit model for your military because any thinking person can see that any other scheme would clearly increase costs astronomically.
Why wouldn’t you want your doctor triaging access to resources instead of insurance company bean counters or your wallet. It seems so obvious to us.
But seriously, I used to think my American neighbours were finally going to take a giant step forward, and this was just the fellow to do it, I was so happy to see it. I honestly felt that thinking people would be able to reason the rest through the parts being politicized, the fear mongers and the water muddyers.
But, having followed the debate with some interest I now think you all totally deserve what you have. You don’t seem to want to improve things or take your collective head out of your collective ass.
Respectfully, you’ve got it backwards. They get their profit from you guys, and the rest of the world covers their research costs.
Well, it makes exactly as much sense as anything else you’ve said. :dubious:
Well, Microsoft and Exxon make about 38% profit, eg 2x that of the pharma industry. Therefore, while pharmas are more profitable than the average, they pale compared with software and petrochemical companies. I haven’t bothered to check other industries.
Sorry, but I think you’re wrong.
“On the margin. The oil industry urges people to look beyond its profits to its profit margin: about 7.6 percent of revenues late last year. That’s not much higher than the 5.8 percent profit margin for all U.S. manufacturing, and if you exclude the financially troubled auto industry from that analysis, the oil industry actually appears less profitable than most manufacturers, which were earning 9.2 cents on every dollar of sales.”
Could you please give a cite for your claim that they have a 38% profit margin.
One could reasonably expect that Exxon’s profits in the year of $150 oil might be anomalous…
From google finance:
Pfizer: Net profit margin 16.67%
Exxon Mobil: Net profit margin 9.47%
Not a big fan of the numbers game.
You mean the reason I pay so much locally for books, CD, and DVDs is that I’m subsidizing the US market?! How is that fair? 
Also FWIW, while we do have pharmaceutical advertising in NZ it’s pretty low key, and tends to be of the variety: “If you’re tried everything else to lose weight ask your Doctor is Xrygleblarg might be right for you”.
This appears to be the point (particlarily in bold) that mswas is having a hard time with. He seems to be suggesting that Pharam is losing money on drug sales in other countries (by not totally recovering costs - namely R&D) but is okay with the losses since it makes a killing in the US market.