E-DRUG: Can we standardize the pharmaceuticals' mark-up on cost? (7)
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dear E-druggers,
The goal of making essential medicines available to all who need them are admirable, but I believe it would be difficult to standardize on a mark-up on cost formula to determine fair prices for pharmaceuticals.
People who manufacture pharmaceuticals, whether innovators or commodity suppliers, seldom think in terms of cost plus. When a new moiety obviates or shortens hospitalization times, the manufacturer quite reasonably prices it in light of those savings. The cost of the chemicals, the quality controls, distribution and marketing costs, etc are factored in, but so are the savings the drug offers. Similarly, when that drug's patent expires, generic manufacturers offer prices irresistibly below the innovator's, but not necessarily near production costs (the substantial profits of many generic suppliers testifies to their skills in that regard). A generic priced at half the innovator brand remains a bargain, even though it is also handsomely profitable for the facsimile manufacturer.
In candor, I doubt that attempts to standardize pricing based on cost, however calculated, will be worthwhile. It might be more helpful to improve transparency in pricing across borders and among buyers by simply sharing the data.
Regards
James B. Russo
146 Koenig Rd.
Bernville, PA 19506
USA
jbrusso@aol.com
610 488 9060
484 269 7490 (mobile)
510 488 7036 (fax)
E-DRUG: Can we standardise the pharmaceuticals' mark-up on cost? (8)
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[OK, if not global STANDARDS, can we issue GUIDELINES what is reasonable, and then work on professional ethics? WB]
Dear e-druggers,
I tend to agree with both James and Libby on this point. At the end, there are simply too many comercial and public service issues that might militate against any effort to standardise. In Zambia we're about to introduce collaborative mechanism that will shed light on this subject as it applies to the Zambia and hopefully SADC region (with the support of DFID's MeTA initiative).
Regards,
Bonnie Fundafunda
Manager, Drug Supply Budget Line,
Ministry of Health,
Lusaka,
Zambia
bcfunda@hotmail.com
E-DRUG: Can we standardise the pharmaceuticals' mark-up on cost? (10)
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James,
You suggested that "When a new moiety obviates or shortens hospitalization times, the manufacturer quite reasonably prices it in light of those savings".
Such overpricing is only possible when markets are malfunctioning contrary to the interests of society as a whole.
See:
Baker D. Financing Drug Research: What Are the Issues?
Washington DC: Center for Economic and Policy Research; 2004 Sep 21(3)
www.cepr.net/publications/intellectual_property_2004_09.htm
Mansfield PR. What everyone needs to know about drug marketing. Part 2: Prices.
Healthy Skepticism International News 2007 January;25(1)
www.healthyskepticism.org/news/2007/Jan.php
regards,
Peter
Dr Peter R Mansfield OAM BMBS
GP
Director, Healthy Skepticism Inc
www.healthyskepticism.org
Lecturer, Discipline of General Practice, University of Adelaide
www.adelaide.edu.au/directory/peter.mansfield