> Remember our friend Shkreli? How about insulin formulation, and Truvada (PREP) that’s $200 a year generic, and $1300 a month in the US.
Those are prices, not net margins. How much did the research cost, including the failed attempts before they found one that worked?
This is why "research" is a necessary qualifier. If you just find the occasional schmuck who got a good deal on a patent that was worth more than the seller anticipated, that isn't telling you much. The likes of Pfizer and Merck are public companies, you can go find their net margins from their financial statements. They're not 99%.
> There are many more, their credit pharma companies have accountants thst would make Hollywood blush, so it takes some digging past the claims of R&D (dwarfed by marketing budgets in many cases) being the cost driver, and not record profits.
The marketing budgets are a byproduct of insurance. Typically to make $100 in revenue you have to convince a customer to pay $100 for something that provides $110 in value to them. Throw in insurance and you make $1000 in revenue because the patient pays $100 for $110 in value while the insurance pays $900 more, which makes it much more valuable to advertise, so they advertise much more.
Insurance and patents are basically incompatible. The idea of patents is that you give someone a temporary monopoly and the market (i.e. the customer) decides how much the product is worth before they refuse to buy. The idea of insurance is that there is a low probability high cost event that the insurance pays whatever is necessary for if it comes to pass. But if the insurance pays whatever is necessary, and the seller has a monopoly, the seller can charge arbitrarily high prices. Or the price is limited by the patient's copay percentage, i.e. the insurance does nothing but raise the price by the exact amount the insurance covers, because the patient discounts the price by that amount when choosing whether to purchase.
People would pay a lot less in total, i.e. about the same amount for drugs and far less in premiums, if insurance companies would stop covering patented drugs whatsoever.
Those are prices, not net margins. How much did the research cost, including the failed attempts before they found one that worked?
This is why "research" is a necessary qualifier. If you just find the occasional schmuck who got a good deal on a patent that was worth more than the seller anticipated, that isn't telling you much. The likes of Pfizer and Merck are public companies, you can go find their net margins from their financial statements. They're not 99%.
> There are many more, their credit pharma companies have accountants thst would make Hollywood blush, so it takes some digging past the claims of R&D (dwarfed by marketing budgets in many cases) being the cost driver, and not record profits.
The marketing budgets are a byproduct of insurance. Typically to make $100 in revenue you have to convince a customer to pay $100 for something that provides $110 in value to them. Throw in insurance and you make $1000 in revenue because the patient pays $100 for $110 in value while the insurance pays $900 more, which makes it much more valuable to advertise, so they advertise much more.
Insurance and patents are basically incompatible. The idea of patents is that you give someone a temporary monopoly and the market (i.e. the customer) decides how much the product is worth before they refuse to buy. The idea of insurance is that there is a low probability high cost event that the insurance pays whatever is necessary for if it comes to pass. But if the insurance pays whatever is necessary, and the seller has a monopoly, the seller can charge arbitrarily high prices. Or the price is limited by the patient's copay percentage, i.e. the insurance does nothing but raise the price by the exact amount the insurance covers, because the patient discounts the price by that amount when choosing whether to purchase.
People would pay a lot less in total, i.e. about the same amount for drugs and far less in premiums, if insurance companies would stop covering patented drugs whatsoever.