Five countries to get cheap Windows XP

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Subsidized drugs? What a stupid idea

The US susbsidises drugs for other countries in the world? That's news to us that work in the pharmaceutical industry.

Seriously, drug companies sell for what they can get. Big Pharma (and it should be pointed out that of the largest Pharma groups in the world the majority are European, and a fair number of large Pharma make MORE than half their profits outside the US) are not going to sell their drugs for less.

US consumers pay more for drugs because their system is set up to generate high prices. Simple as that.

Most(if not all) HMO's are cost-plus organisations. If a drug company charges a higher price than is covered in their deductable, they pass that onto the consumer and take an extra whack on top. Why should they use time and money to negotiate lower prices in that situation? (Even assuming they had the clout to do so, which of course they don't).

It's not purely a question of bulk purchasing, although that helps, but most countries have national health systems which both approve drugs and authorise the drugs that can be covered by national health plans - the same way that HMOs and health insurance plans do in the US, although authorisation is given by the FDA, in the US. The difference is that national health plans can negotiate on coverage plans. If your drug is too expensive, then they can simply refuse to buy it and that's essentially the end of the market. So companies negotiate the best deal they can - which is exactly what MS is doing here.

I know exactly what I am talking about. Our team have recently develped a diagnostic kit which looks likely to dominate the world market, based on initial sales. We sell it at a profit everywhere, but we're getting a higher profit in the US.

Why? Because we can. Some HMOs might wish not to buy the product at the higher price: but their competitors will let GPs know that they are moving the superior product and the holdouts will lose business if they don't come on board. Look at it this way - how many of you would move to a lower cost HMO if the message was - We can provide cheaper healthcare - of a lower quality!

Off track, I know, but I've run up against this "subsudized drugs" thing before and it betrays extraordinary ignorance of how the market actually works.

cheers, Mark

Posted by: markdoc.geo   Posted on: 08/12/04 You are currently: a Guest | Members login | Terms of Use

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