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chaloobi
SFN Regular
1620 Posts |
 Posted - 08/16/2004 : 07:25:38
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The pharmacuetical industry is the most profitabl in the world. Their justification for such high prices on drugs is that they need the money to research new drugs, which is costly and prone to dead ends. I keep hearing that if we had price controls (making drugs more reasonably priced, not necessarily dirt cheap), then pharmaceutical innovation will be stifled, new drugs will not be invented, and so on. I, however, am skeptical. I think the prices are high because people must pay for them and the market will bear it for something people must have to live. I think pharmaceutical companies, employees, executives, and stock holders are taking an extravagant bath in money over the backs of people who have no alternative but to pay the exorbidant prices for the drugs they need to live.
Now, I would love nothing more to be proven wrong. Yet, nobody ever produces any proof. I read articles and editorials on the topic, have arguments with coworkers, and yet there is never any evidence produced to support the drug company's claims to need to generate these high profits for innovation. Does anybody know of any independent information source that shows something like this:
Last 15 years of drug company profits vs. where those profits go?
Or
Cost of innovation and manufacture of all drugs vs. the profit generated from all drugs over X period?
Moved to the Health folder - Dave W.
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-Chaloobi
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Starman
SFN Regular
Sweden
1613 Posts |
Posted - 08/16/2004 : 08:09:33 [Permalink]
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quote:
Originally posted by chaloobi
The pharmacuetical industry is the most profitabl in the world.
Good!
Which industry would you like to have as most profitable? Tobacco? Guns?
If you feel that the profit margin is to high, you are free to develop and sell cheaper products.
We could also get cheaper health care if those greedy physicians and nurses would take a pay cut.
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Gorgo
SFN Die Hard
USA
5310 Posts |
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chaloobi
SFN Regular
1620 Posts |
Posted - 08/16/2004 : 08:22:50 [Permalink]
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quote:
Originally posted by Starman
quote:
Originally posted by chaloobi
The pharmacuetical industry is the most profitabl in the world.
Good!
Which industry would you like to have as most profitable? Tobacco? Guns?
If you feel that the profit margin is to high, you are free to develop and sell cheaper products.
We could also get cheaper health care if those greedy physicians and nurses would take a pay cut.
Thanks for spamming the thread, bone head. If you have anything intelligent to say, I'd appreciate it. Otherwise feel free to keep your thoughts to yourself. |
-Chaloobi
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chaloobi
SFN Regular
1620 Posts |
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Dave W.
Info Junkie
USA
26022 Posts |
Posted - 08/16/2004 : 11:10:27 [Permalink]
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Public Citizen doesn't seem like it's as unbiased a source as one would want, either. I mean, why should pharmaceutical companies have to open their R&D ledgers? Does any other industry hand out the details of their R&D expenditures without being supoenaed? Public Citizen appears to think that this is a reasonable request, however, which makes me question their conclusions. This laptop is all screwed up when it comes to PDF files, though, so that'll have to wait.
However...
Pfizer claimed a net income of only 8.7% of their gross in 2003. That's "three times" other industries? My boss (computer industry) wanted us to aim for a profit margin of 30% when pricing products. Pfizer also claimed R&D expenses of $7.131 billion (out of $45 billion in revenues, including over-the-counter stuff and veterinary products).
Pfizer's just one example. I own no stock in them or any other pharma company (that I'm aware of).
Finally, it's important to remember that the people who run these companies, those who sit on the boards of directors, and who own the stock really are people, and any of 'em might get life-threatening diseases, and so too their families and friends. The idea that they (the thousands of them in board rooms and upper management alone) would knowingly rip off the illness-ridden public is tantamount to suggesting that they're all sociopaths. The Public Citizen report appears to be doing just that, however. |
- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
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chaloobi
SFN Regular
1620 Posts |
Posted - 08/16/2004 : 12:08:22 [Permalink]
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quote:
Originally posted by Dave W.
<snip> I mean, why should pharmaceutical companies have to open their R&D ledgers? <snip>
Because the products they produce are critical to the lives of millions of people who have no choice about using them and the expense of these products is high enough that many people have a great deal of difficulty paying for them. So if there is no good reason for the huge difference between cost to produce and sale price then this is perhaps one of those situations where the government should intervene in the market to ensure the good of the people. So if they company claims there IS a good reason for the big price, they should be ready to produce proof to back it up so we can find another way to address the problem for those having trouble buying drugs. |
-Chaloobi
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Valiant Dancer
Forum Goalie
USA
4826 Posts |
Posted - 08/16/2004 : 12:45:09 [Permalink]
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quote:
Originally posted by chaloobi
The pharmacuetical industry is the most profitabl in the world. Their justification for such high prices on drugs is that they need the money to research new drugs, which is costly and prone to dead ends. I keep hearing that if we had price controls (making drugs more reasonably priced, not necessarily dirt cheap), then pharmaceutical innovation will be stifled, new drugs will not be invented, and so on. I, however, am skeptical. I think the prices are high because people must pay for them and the market will bear it for something people must have to live. I think pharmaceutical companies, employees, executives, and stock holders are taking an extravagant bath in money over the backs of people who have no alternative but to pay the exorbidant prices for the drugs they need to live.
Now, I would love nothing more to be proven wrong. Yet, nobody ever produces any proof. I read articles and editorials on the topic, have arguments with coworkers, and yet there is never any evidence produced to support the drug company's claims to need to generate these high profits for innovation. Does anybody know of any independent information source that shows something like this:
Last 15 years of drug company profits vs. where those profits go?
Or
Cost of innovation and manufacture of all drugs vs. the profit generated from all drugs over X period?
Moved to the Health folder - Dave W.
I don't think you're going to find this information. Private companies are not keen to turn over propritary documents.
I find it questionable that some companies change the coloring of their pills with slightly different inactive ingredients (filler) in order to be able to extend their patent on the drug. Some generic manufacturers have started questioning the legality of this practice.
Quite frankly, development of new drugs is very expensive. To the point that some pharmacutical companies spend a significant part of their budget to products that will never see the light of day. It takes literally years for a drug to be invented, tested, and approved/declined.
The computer industry is dissimilar enough to the pharmaceutical industry to make any comparison of the two to be meaningless. If you compared the computer industry to the soft drink vending industry, you'd find a greater profit margin being expected there. (In 1986, a can of Coke was $.26 per can being sold for $.50-$.60 per can. Generics were priced at $.13 per can but sold for the same amount.)
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SciFi Chick
Skeptic Friend
USA
99 Posts |
Posted - 08/16/2004 : 13:06:13 [Permalink]
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quote:
Originally posted by Dave W.
Pfizer claimed a net income of only 8.7% of their gross in 2003. That's "three times" other industries? My boss (computer industry) wanted us to aim for a profit margin of 30% when pricing products. Pfizer also claimed R&D expenses of $7.131 billion (out of $45 billion in revenues, including over-the-counter stuff and veterinary products).
Gross and net are different. I wonder which profit line is being looked at by the people who criticize the pharmaceutical companies.
quote:
Finally, it's important to remember that the people who run these companies, those who sit on the boards of directors, and who own the stock really are people, and any of 'em might get life-threatening diseases, and so too their families and friends. The idea that they (the thousands of them in board rooms and upper management alone) would knowingly rip off the illness-ridden public is tantamount to suggesting that they're all sociopaths. The Public Citizen report appears to be doing just that, however.
I have to disagree there. All you need are a few sociopaths at the top. Most people are willing to make profits on their stocks without thinking about it a whole lot. They just tell themselves that the companies they buy stock in are good guys and following the law, and leave it at that. That's how you end up with a situation like Enron.
Then, there's the power structure at the top. Recently, the stockholders of Disney voted for some major changes, including asking Michael Eisner to step down. He and the board of directors basically ignored them, and I'm still waiting to see if anything else will come of it.
I think greed is a serious problem that is facing our country right now, but I don't think the solution is policing specific industries. I prefer a more comprehensive approach that changes the nature of Wall Street and stock holding altogether. |
"There is no 'I' in TEAM, but there is an 'M' and an 'E'." -Carson
"Rather fail with honor than succeed by fraud."
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SciFi Chick
Skeptic Friend
USA
99 Posts |
Posted - 08/16/2004 : 13:09:25 [Permalink]
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quote:
Originally posted by chaloobi
quote:
Originally posted by Dave W.
<snip> I mean, why should pharmaceutical companies have to open their R&D ledgers? <snip>
Because the products they produce are critical to the lives of millions of people who have no choice about using them and the expense of these products is high enough that many people have a great deal of difficulty paying for them. So if there is no good reason for the huge difference between cost to produce and sale price then this is perhaps one of those situations where the government should intervene in the market to ensure the good of the people. So if they company claims there IS a good reason for the big price, they should be ready to produce proof to back it up so we can find another way to address the problem for those having trouble buying drugs.
So how much is too much profit?
If pharmaceuticals are going to be profit making enterprises, then that's what they are.
If we take it out of the private sector and put the government in charge, I personally, think millions of people will suffer since the R&D money will evaporate.
I think it's a shame that people are suffering. However, there was a time the drugs didn't exist at all. I look for the time when there are cures rather than patches, and I think R&D is the way that will happen. |
"There is no 'I' in TEAM, but there is an 'M' and an 'E'." -Carson
"Rather fail with honor than succeed by fraud."
-Sophocles |
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Dave W.
Info Junkie
USA
26022 Posts |
Posted - 08/16/2004 : 15:11:35 [Permalink]
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Chaloobi wrote:quote:
Because the products they produce are critical to the lives of millions of people who have no choice about using them and the expense of these products is high enough that many people have a great deal of difficulty paying for them. So if there is no good reason for the huge difference between cost to produce and sale price then this is perhaps one of those situations where the government should intervene in the market to ensure the good of the people. So if they company claims there IS a good reason for the big price, they should be ready to produce proof to back it up so we can find another way to address the problem for those having trouble buying drugs.
Even companies are presumed innocent until proven guilty. If nobody's got the evidence that the drugs are tremendously overpriced, then there's no just cause to go prying into the companies' books.
Even if there were, where's the privately-held drug company which has abnormally-low prices due to not being driven by stockholder greed?
Besides which, we're getting close to discussing this problem as if the pharmaceutical industry were one giant company. In fact, it is a lot of companies which compete against each other with different drugs for the same diseases. Don't you think that - if the prices were so terribly inflated - we'd have already seen instances of massive undercutting? We haven't. And if we start getting into price-fixing hypotheses, I might have to move this to Conspiracy Theories.
Note: I picked Pfizer because they've got a massively successful and non-life-saving drug (right now) called Viagra, and figured their numbers would show an insanely high profit margin since the drug appears to be in use recreationally as well as medically. But their margin appears to be a rather sedate 8.7%. How did Glaxo do? Lilly? Which drug companies - precisely - are in the Fortune 500, and what are they reporting as profits? Did I just hit a "loser" from last year, and everyone else is swimming in cash at 30% net or more? |
- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
Visit Dave's Psoriasis Info, too. |
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Gorgo
SFN Die Hard
USA
5310 Posts |
Posted - 08/16/2004 : 15:26:35 [Permalink]
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If the government is subsizing R & D, and the only R & D that the companies are paying for is how to make their aspirin look better than another's aspirin, and the companies are charging us as though they paid for the real R & D, then there is a problem.
Not saying that that is happening 100%, but how much does it happen? We don't know. |
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Dr. Mabuse
Septic Fiend
Sweden
9688 Posts |
Posted - 08/16/2004 : 15:27:39 [Permalink]
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quote:
Originally posted by chaloobi
quote:
Originally posted by Starman
quote:
Originally posted by chaloobi
The pharmacuetical industry is the most profitabl in the world.
Good!
Which industry would you like to have as most profitable? Tobacco? Guns?
If you feel that the profit margin is to high, you are free to develop and sell cheaper products.
We could also get cheaper health care if those greedy physicians and nurses would take a pay cut.
Thanks for spamming the thread, bone head. If you have anything intelligent to say, I'd appreciate it. Otherwise feel free to keep your thoughts to yourself.
I think Starman was skeptical to your claim that the pharmacuetical industry was the most profitable in the world. I myself always thought that narcotics, arms, and oil was on top of that list. At least they top international gross product. That's what I have been told. |
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Dave W.
Info Junkie
USA
26022 Posts |
Posted - 08/16/2004 : 19:43:41 [Permalink]
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Gorgo wrote:quote:
If the government is subsizing R & D, and the only R & D that the companies are paying for is how to make their aspirin look better than another's aspirin, and the companies are charging us as though they paid for the real R & D, then there is a problem.
Well, if the money is going someplace else, where? If it's going directly into the higher-ups' pockets, that'd be called embezzlement.quote:
Not saying that that is happening 100%, but how much does it happen? We don't know.
If it's happening at all, it's a crime. You appear to be saying that the $7.whatever billion that Pfizer claims to have put into R&D last year might be a lie, even if their balance sheets work out right.
Or is this a case in which many people feel that 8.7% profit is too much? |
- Dave W. (Private Msg, EMail)
Evidently, I rock!
Why not question something for a change?
Visit Dave's Psoriasis Info, too. |
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Starman
SFN Regular
Sweden
1613 Posts |
Posted - 08/17/2004 : 00:21:39 [Permalink]
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quote:
Originally posted by Dr. Mabuse
I think Starman was skeptical to your claim that the pharmacuetical industry was the most profitable in the world. I myself always thought that narcotics, arms, and oil was on top of that list. At least they top international gross product. That's what I have been told.
Well maybe but that was not my point.
Sorry if I was a bit aggressive but Im actually pretty sick of whiners rambling about the profits of pharmacuetical companies.
Its great that people developing pharmacuetic drugs make money, thats how capitalism works. If anybody think that any other economic system is better to produce the drugs the world need, please show me. (No utopian dreams please)
Do you really think that a company sets its prices just to cover innovation & manufacture? A company sets its prices to maximize profits. If the cost cant be covered (with a margin) the product would not be produced or developed at all.
How long do you think a company would like their patents to last?
Forever.
How long does patents last?
As long as a government think is best (most profitable) for the economy in the long run .
Patent laws could perhaps be improved, but which company would invest billions in eg. a malaria cure if it had reason to suspect that some government would just ignore its patent when the development is done.
People in the third world lacks drugs, not because companies charge to much for them, but because their own governments and other governments lacks the interest to spend any real money on the problem. Blaming greedy companies is much more convenient.
Governments, organizations and even individuals can also develop drugs, by patents or cooperate with established companies to get better control of the cost.
If the profit margins are so exorbitant, why don't they?
quote:
Originally posted by chaloobi
Thanks for spamming the thread, bone head. If you have anything intelligent to say, I'd appreciate it. Otherwise feel free to keep your thoughts to yourself.
Sorry to bother your precious thread with dissenting posts, but that's life outside kindergarten.
You can always start your own forum and ban me. |
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beskeptigal
SFN Die Hard
USA
3834 Posts |
Posted - 08/17/2004 : 01:02:23 [Permalink]
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quote:
Originally posted by Starman
We could also get cheaper health care if those greedy physicians and nurses would take a pay cut.
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| Edited by - beskeptigal on 08/17/2004 01:02:58 |
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