Tuesday, January 29, 2008

Read this...

... if you think drug companies are profiteering on the backs of suffering Americans, charging ten times as much as is fair, forcing little old ladies to eat cat food so they can buy their life-sustaining medications, and being all around evil rich guys at our expense.

Read this.

I'm glad we have an FDA and a federal government supervising the production and sale of new medications; if there was not that level of attention paid, many ordinary people would die while hucksters engineered money-making opportunities out of fake and dangerous products.

The downside of an FDA, though, is the tremendous expense in money and time required of a manufacturer to 'clear' a new drug for sale. It is years, sometimes decades, before a drug is ready for market. It is hundreds of millions, or billions, of dollars spent in research and development, and thousands of failed attempts before a new and better treatment for this or that disease is found, cleared and ready for sale.

If drug companies were prevented out of 'fairness' from making the kind of profits they make through American sales, they would at some point simply stop investing in R and D, and as McArdle says, they'd even stop manufacturing drugs entirely; without the chance at those future big profits, investment would be pointless and foolish.

They could do better with their money in some hedge funds, or finding choice commercial real estate during this downturn.

And of course, the final result of a shrunken landscape of pharmaceutical companies and a vanishing of research and development investment would be....?

You got it. Drugs would get more expensive, quality would decrease, and of course no new drugs would be invented; the risk would outweigh the reward.

Read the article, and ask yourself if you really believe that drug companies should have artificial ceilings placed on their potential profits, artificial upper limits placed on the prices they can charge for their products. Does this EVER work?

There are three sides to the economic triangle-- price, quality, supply. When price is forced down, either supply or quality (or both) will quickly manifest a similar change. If a product is not sufficiently profitable, business will not risk investing in it. And when that happens, when manufacturers go OUT of the business, supply dries up.

And when THAT happens, the price for the remaining product escalates. While it lasts. And increased price means even lower demand, which will drive even more manufacturers out of the business.

It's not out of the question for 'price controls' or 'profit controls' on American drug manufacturers to have the end result of forcing us all to buy whatever drugs are still made from MEXICAN or CHINESE manufacturers.

And that cure for cancer? Forget about it.

No comments: