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Thursday, May 27, 2004

Drug Prices and Pharmaceutical Company Profits

Aric and his raging squirrels post about the rising costs of drugs. I am not going to try to argue all the spefics in this post. I will simply refer you to this Article on Tech Central Station. I will say this though. Whenever you insist that someone take their private property and give it over to others for free (or partially free because of price controls) you are in effect trying to enslave them. This is wrong, and even worse it is foolish.


Blogger Aric said...

I have never advocated giving drugs away for free. Nor do I disagree with the idea that as a company, you have the right to make a profit.

While I respect the arguments made in the online article, there is a fundamental flaw in it. The fundamental flaw is the implicit assumption that people who need the drugs are able to afford them if they are on the market. I believe this is in error.

Although there has rarely ever been a shortage of any one drug in the U.S., there are many who cannot receive them because they have to pay for them out of pocket. There are also privatized health care companies who make their patients foot the bill for most of their non-generic drugs. Does the health care provider say you can't have them? No. Do you get them if you can't pay for them yourself? No.

So in essence, we do have price controls. They just aren't government mandated.

I also accept the argument that R&D costs are a significant part of drug making. So is advertising. In fact, if you look at the SEC filings for drug companies, you will find that they spend on average twice the amount of money on advertising that they do on R&D. Necessary? Probably, but I'm not sure.

Finally, I am glad that our FDA lets it take a long time to bring a new drug to market. What the distinguished author of that article also does not mention is that life saving drugs are giving a fast track through the FDA screening process, which does not change the overall cost, but allows a company to begin recouping their investment sooner. Non-life saving drugs are slowed down, and this is a GOOD THING. Why? Thalidomide babies was a European phenomenon. It never made it to the U.S., because the FDA didn't allow it here. I'll wait an extra two or three years for my new painkiller or acid reducer in exchange for not giving birth to babies with three heads.

5/27/2004 07:15:00 AM  

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