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Comment by Retric | Hacker News Reader

Corruption. However, the line is generally described as: If companies can't discount per country then all countries end up paying high prices without discounts. However, if they can discount prices in some countries then that maximizes profits which increasing the customer base.

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It's much more complicated than that. Sales in the US where they can charge more are what actually offer pharma companies good ROI. Effectively the US is subsidizing R&D for the rest of the world.

Agreed. Pharma is managing their expenses and profitability based upon the ability to charge much higher prices in the US. Take that away and suddenly everyone outside the US will have to pay more -or- Pharma will have to rethink their business model. The more this connection is obfuscated the easier it is to confuse decision makers.

Pharmaceutical companies do a lot more than just R&D making said subsides horribly inefficient and thus a lie. But, yes that's the line used.

This is a lie.

Saying it's a lie makes it sound like you think it's deliberately mendacious. In fact, it seems more likely that the poster believes it. It might be more constructive and interesting to say something like 'this is incorrect because/as this reference shows...'

The implication of the 'subsidy' argument is that there's a certain level of profit required to drive a certain amount of product development and innovation. In other words, to get the current level of drug discovery / development / etc., pharma requires the current level of return.

The question for me is how how inelastic this relationship is. The pharma companies would have you believe that if some kind of price controls of some kind were put in place, and the total amount of profit to be had was reduced, then the inexorable result would be a scaling down of the whole process: a sinking tide lowering all ships. Is that a realistic model? I don't know. Is there way to know? I don't know that either.

It's easy to make religious claims from either side, but it would be nice to have a better sense of the system dynamics here.

Not for European drug companies (and there are quite a few of them) who must negociate price in Europe, yet still cover all their R&D.

Those same comapnies then sell the same drug with pure profit (minus marketing & regulatory cost) in the US, for 4x the price because they have a monopily on it.

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