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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81563  
Subject: Re: Bush and the self employed Date: 2/6/2003 8:44 AM
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How, then, would you explain the same exact drugs, by the same companies, selling for a fraction of the cost in Canada?

jedenison summed it up quite well. Essentially, there are two factors at work:

(1) The Canadian economic system will not allow for prices that are as high as ours. Since they cannot afford the same prices we pay, some drugs are less expensive. This is simple supply and demand economics...

(2) The Canadian government sometimes puts price caps in place. This allows the drug companies to make some profit on the sales (if there were no profit, they would pull the drug from the Canadian market), but it does not allow for enough profit to justify to enormous R&D costs.

You cannot get the drug advances we are seeing without prices that can produce profit margins high enough to justify the R&D expense. If you want to live the rest of time with basically the same selection of drugs we currently have, it would be easy to sell them at dramatically lower prices. However, I have never heard of anyone being willing to stand pat with our current selection of drugs...so R&D is necessary and profit margins for the drug companies must follow...so you get "crazy" prices on some drugs...

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