With friends like us, what do the UK and Canada need with enemies?

Because a nice American lady told us to “Just say no to drugs.” So we did. You should follow Nancy’s advice and say no to big pharma as well. Don’t blame us for doing what your leader told us to do. Time for you to start carrying your weight in the war against drugs.

Because we are polite, fuckhead.

Multiquote is your friend, Muffin. Or at least it would be, if you’d only let it in.

Because thy God hast forsaken thee. Repent!

It’s a good thing the drugs treating it are generic now, because you seem to be suffering from multiple personality disorder. Exactly what necessitates a half dozen or more consecutive posts, most of them replies to the same post?

The sheer stupidity and arrogance of the original post?

Remember that scene in Roxanne where Steve Martin accepts a challenge to come up with better ways to insult someone with a big nose than the jerk attempted? And they pick a number of insults by having the jerk throw a dart at the dartboard? And the jerk hits a 20?

Muffin hit a six.

Of course, if this were a Cricket analogy, then that would be very high praise indeed. It’s all about context, folks. :wink:

Okay, let me throw my hat in the ring with Rickjay, who is absolutely right. Let me see if I can explain.

Let’s say I make a very cool product that everyone wants. How should I price it? I recognize that rich people will pay more than poor people. So ideally, I’d like to charge the rich people a lot, and poor people somewhat less. Some people will be happy to pay more because they have a special affinity for the product, while others don’t care that much and will pay much less.

In a perfect world, I’d like to charge everyone exactly what it’s worth to them. If I make a collector’s Star Wars set, I’d like to charge Star Wars fans $500 for it, but still sell it for $20 to little kids or their parents.

But if I work in an homogenous market, I can’t do that. I have to find one price that maximizes profit across the entire range of customers. So I give up some per-unit profit from the rich people in order to get more volume from the poor people.

One trick I can do is to make a special ‘collector’s edition’ of the same (virtually identical) product. Or, if I make Toyotas, I can take a Toyota, add $2000 worth of better materials and gadgets to it, and sell it for $10,000 more and call it a Lexus.

This is called ‘price discrimination’. All companies try to do this. They want to charge what the market will bear, and they’d love to fracture the market into many little pieces so they can charge the most that every little piece will bear.

One way companies can do this is by selling internationally. They can set a different price in each country, thus maximizing their profit. If drug manufacturers sold their drugs in Canada for what they sell them for in the U.S., they would make LESS money, assuming they are good at pricing and have currently found the price that maximizes revenue. If they made less money, their profits would fall.

Now, drug manufacturers have very steep economies of scale - their marginal cost per unit drops dramatically with volume. So if a drug company can sell more pills in Canada, it will make more profit. Raise the price of pills in Canada, and the total number of units sold drops, and the price per unit goes up.

It is entirely possible that if you forced Canadians to pay the same for drugs as Americans do, the price of drugs for Americans would increase. Think of it this way - since the production cost of a pill is virtually zero, any additional sales outside of America a drug company can make helps to lower the cost for Americans.

What happens if you allow drug re-importation into the United States? At very low levels, probably not much. But if suddenly every American started buying drugs from Canada, the price of drugs would simply rise in Canada. It would rise to the point where the drug companies are again maximizing profit, but at less efficient pricing. So their overall profit would decline. How much it would rise to depends on a whole bunch of things. If the price in Canada is currently the market-clearing price, then if it rises fewer pills will be sold in Canada and overall profit from Canadians will drop. That profit has to come from somewhere.

One note about the high profit of drug companies:

Companies that make high profits often do so because they take on additional risk. This is totally reasonable. If Pfizer made the same amount of profit as some commodity company with low risk, why would anyone ever invest in Pfizer? Pfizer’s profits could crumble from a change in government regulation, or from a bad series of drug trials that cost hundreds of millions of dollars each and produce no viable drugs.

All this talk about regulating Pharma, allowing drug re-importation, and taking away ‘excess’ profits is going to have the effect of driving up drug prices as investors increasingly become squeamish about putting their money into a risky business, or as the drug companies start cutting back on research because the risk of losing the R&D investment is too high.