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Sometimes it seems to me that Fools who can give Foolish advice on investing turn into fools, or the Wise, when they stray into other matters. I think Bill Mann has done so here.

He seems to think a disaster is in the making with drug reimportation when, really, it is a symptom, not a cause, IMHO.

First, what's wrong with differential pricing of the same product? Ever flown on an airline? Chances are that many of the people sitting in your class of service paid more than you did. Did the world end for the airlines or the flying public because this happened?

Second, Bill points to a big problem -- orphan diseases, which do not meet internal profit-potential guidelines for the Pharmas to want to tackle them, even with the monopoly protection they get if they succeed. But Bill only mentions that more diseases could enter this designation if price controls were applied. Personally -- and it would be very personal if I, or a family member suffered from one of these orphan diseases -- I have a different take: what do we have to do to get these orphan diseases dealt with? How, as a society, can we think that it is better to provide huge financial gains to develop seventeen different chemical erector sets while failing to put any money into these orphan diseases. Its obvious the current incentive system is not enough -- maybe it should be sweetened, or otherwise modified. But to let it be ignored?

Third, who says that unlimited drug prices are good for our country? Or for Pfizer, et al. On another board, I read (and commented at length) about a statistic that 44% of the people eligible for stetins in this country do not get them. The proponent of this statistic thought it was a good number, when compared with the German experience (74% eligible fail to get it), but I thought 44% failure wasn't a great ideal to shoot for. (and wondered why, with virtually unlimited marketing resources, the Pharmas couldn't achieve higher share.) In any case, since government-imposed price controls are not the issue in the US, why does this 44% exist? Well, there are lots of reasons, including price controls by the HMOs and insurance companies, but also the availability of alternatives (like simple niacin in some cases) which do not have billions of dollars being spent marketing them to doctors. This tells me that in spite of the clear benefit to society of incenting private enterprise to develop new molecules for treatment, we ought to be aware of the ways the drug patent monopoly can skew the treatment marketplace in ways where the most optimal allocation of medicines does not take place. (Another reason might be because, faced with price controls in Germany, the Pharmas do not market at all, and so do not skew stetin use away from more economical, but just as effective, courses of treatment.)

Fourth, anyone who thinks price controls -- or perhaps profit controls -- are not coming to pharmaceuticals must have been living in a bomb shelter the past few years. Have you ever checked out the margins which these companies earn? Pfizer has 78% gross margins. That's Microsoft territory. And the pharmaceutical industry as a whole has gross margins in the mid-60s; very few industries have such high overall margins: I found only teclco services and software. So it won't be a stretch for regulators and legislators and citizens -- in reviewing the impacts of the drug monopolies that were established to incent private development -- to conclude that perhaps things have gone overboard just a little. It is not unreasonable to suggest that perhaps the system is more generous than it needs to be -- and that the system needs to be modified so as to encourage the development of a drug-creating CostCo or JetBlue equivalent of the drug development field.

My lengthy two cents.
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