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Price Gouging Pill Pushers

Discussion in 'Political Discussion' started by All_Around_Brown, Apr 18, 2006.

  1. All_Around_Brown

    All_Around_Brown Rookie

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    http://newstandardnews.net/content/index.cfm/items/3059

    This blows a hole in the hollow argument that some have used here on this board about the price of pharmaceuticals being high because of litigation. The truth is the taxpayer is getting screwed because of pure unadultered greed. The R/D is largely funded by Joe Taxpayer who then gets gouged when he gets sick.

  2. milwaukeebeers44

    milwaukeebeers44 Rookie

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    It's not just litigation. R&D is expensive. Depending on the drug, it could cost many millions just to get to phase III clinical trials. Many more Pharma companies go out of business than succeed if just one of their drugs fails to get FDA approval.

    Yes, there are plenty of Big Pharma lobbyists in DC (I actually applied for a job as one), but I think the bigger problem with them is drug safety moreso than drug pricing.

    Edited to add: I'd also say that 44% of countrywide health research being federally funded is a little high. Trust me, drug companies and academia are doing MUCH better research than we are here in gov't. NIH may have money, but the rest of HHS sure doesn't!
    Last edited: Apr 18, 2006
  3. All_Around_Brown

    All_Around_Brown Rookie

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    My point is that R&D is only a relatively small fraction of the costs. The tax payers support much of the breakthroughs through grants, which are then tweaked every way to sunday to breed whole new drugs at minimal R&D costs. The costs of research is far outweighed by the profits of pharma.
  4. milwaukeebeers44

    milwaukeebeers44 Rookie

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    Sorry, but I don't think so. Like I said before, the 44% is definitely an overestimate. The majority of federal government funding (specifically from the NIH) goes to non-profits and academia. Any taxpayer funded R&D (which isn't much) is given back through private academia grants and contributions to groups like the CDC foundation for use on specific, focused research studies.

    I agree that pharm companies have disgusting profits (which is why I don't work for one anymore), but isn't that their right? How much money do they lose when patents on drugs run out and they're forced to sell OTC because they have generic competitors? Isn't all American business the same way? It's interesting that I don't see anyone complaining about Whole Foods and their "monopoly" of the organic foods market!
  5. All_Around_Brown

    All_Around_Brown Rookie

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    These are good points. I guess the issue of profiting off someones misfortune is to be expected. We see what happened post-Katrina.

    But do I think the government should honor the Bayh-Doyle Act? Hell yes. If its not going to be enforced, then there will be legal actions and they will be justified.
  6. Chevy

    Chevy Rookie

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    I think the problem lies in the fact that many businesses use informal price-fixing.

    To determine markup, you take all your expenses, factor in projected sales, determine what your profit margin should be, and there's your markup.

    A company should set a goal of a 10% profit ... this is after all expenses (to include salaries, bonuses, etc.) are paid.

    What happens is that company A does this, and sets a price of $9.99. Company B does this, and comes out at $6.99. Do they market at that price? No, they feel they're leaving $3.00 on the table, so they jump up to $9.49. Companies C and on do the same.

    Look at gas stations ... MiniMart with 4 employees on duty charges $2.59 a gallon ... Their expenses are higher (store space, payroll, utilities, insurance, etc.) ... Yet, the Porta-Potty unit (you know the one's I'm talking about), with an incredibly lower operating cost, charges the exact same (or within a penny or two). Focus shifted from "what do I really need to charge" to "what will the market bear".

    I also think part of the problems is the stock market. A successful business that is private has to ensure two groups are happy - the employees and the customers. Once a corp goes public, the stockholder becomes more important than either of those two. This leads to short-sighted cost cutting, expensive reorganizations (that accomplish little) - all to make an attractive bottom line and keep a stock's value up. That is such a small part of the picture, and is detrimental to the employee and consumer.

    Dell computers supplanted Gateway and Micron in the 90's because they offered the same quality hardware and even better customer support (something Gateway was the king of at one time). Then they started shifting tech support to India and other nations where they could pay less for labor, show a higher proft, and keep the stock viable. They were rewarded for providing a lesser overall product to the consumer because the stock said it was good.
  7. All_Around_Brown

    All_Around_Brown Rookie

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    Corporate "Informal price fixing" sounds like something we can agree on. It also smells a little like the bad old days of railroad tycoons and robber barons. There are two major components to our current economy that fall in this category, IMO...to which not everyone wants, but everyone needs.

    Oil and Prescription Drugs

    The dependance on the first makes Exxon-Mobil-Chevron-Texaco, Cheney and Bush families rich, in addition to funding terrorists. The dependance on the second makes Bill Frist, the Quayle and Bush families, and many of the most profit-soaked CEOs in the country stinking rich, for which they get tax cuts from the chimp. Makes sense to me.

    Seems like we're back to the good old days of fascism in America

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