see http://accounting.suite101.com/article.cfm/fixed_and_variabl... for an explanation for fixed/variable costs, and why companies will charge less than the average cost to produce something as long as they can get more than the marginal cost per item.
Most people know that drugs have high fixed and low variable costs, but that also is frequently true of new treatments/techniques; it costs far more to develop it than it does to apply it once it exists.
Other countries get low prices by paying the marginal costs, while the US ends up paying most of the fixed cost.
Most people know that drugs have high fixed and low variable costs, but that also is frequently true of new treatments/techniques; it costs far more to develop it than it does to apply it once it exists.
Other countries get low prices by paying the marginal costs, while the US ends up paying most of the fixed cost.