Quote:
Originally posted by Mmmm, Burger (C.J.)
Right, and so was my response. If you look at the profits derived from production of pharmaceuticals, an outsized portion come during the window of exclusivity that either patents, FDA approval, or both provide. As soon as there's generic entry, the profits go way down. To barely profitable levels. So the point is that drug cos. get nearly their entire return on R&D for a given drug (plus the costs of the 100 failures) during a narrow monopoly opportunity. But that monopoly price is not "efficient" in an economic sense, because it's a monopoly price and there's deadweight loss in nearly every monopoly situation.
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I agree with most of this, but would agrue that the recoupment during the monopoloy period for R&D costs and the 100 failures is the most efficient way for the company to recoup those costs, realizing that the pricing may not be the most efficient for the consumers if there are no other alternative drugs to chose from. Are you are saying that the company could charge significantly less, still recoup costs, and make a competitive profit? If so, I would be skeptical.
