# E-DRUG: Feeding the beast? (cont'd) **URL:** https://talk.edrugplus.org/t/e-drug-feeding-the-beast-contd/6683 **Category:** e-drug **Created:** [November 18, 1999, 8:20am UTC](https://talk.edrugplus.org/t/e-drug-feeding-the-beast-contd/6683 "1999-11-18T08:20:27Z") **Posts on this page:** 1 **Page:** 1
### Author: ![peter.mansfield](https://avatars.discourse-cdn.com/v4/letter/p/c77e96/32.png) [@peter.mansfield](https://talk.edrugplus.org/u/peter.mansfield) #### Post date: [November 18, 1999, 8:20am UTC](https://talk.edrugplus.org/t/e-drug-feeding-the-beast-contd/6683/1 "1999-11-18T08:20:27Z")
E-drug: Feeding the beast? (cont'd) --------------------------------------------- On the one hand I do not like Richard's response to Jody because it is too simple and too much like blaming the victim. Political will is not a simple thing that you can turn on like a tap! On the other hand there is a lot of truth in what Richard has written and he has focused in on what is probably the key leverage point. What I was trying to indicate earlier is that companies will set prices as high as they can get away with that will maximise the bottom line. ie as high as the market will bear. If the market consists of many buyers and there is a gap between the rich and the poor then companies will "skim the market" and set high prices that are too high for the poor so they can take more money from the rich. This is not because companies are "beasts" but because of market failure. The problem is a system problem. If companies are rewarded for maximising the bottom line regardless of health care outcomes what should we expect. Given that the market for drugs is so far from the "pure competition model" if buyers want lower prices they must set up some type of bulk purchasing or bulk subsidy scheme to increase their market power such as the Australian PBS or NZ Pharmac. A comparison of Australia and New Zealand provides evidence to support Richard's point. New Zealand is smaller and so has less bargaining power and so should expect higher prices. In the past it has had much higher prices. However in recent years there has been quite strong bipartisan political support for lower prices. This is possible in New Zealand to an extent that would be difficult in Australia because there is little drug manufacturing in New Zealand so the companies have less influence over the politicians than in Australia. As I understand it the prices in New Zealand relative to Australian prices have fallen in recent years. Many companies have dramatically reduced their expenditure on promotion in New Zealand but not in Australia. (Not only can promotion cause high prices but low prices can cause less promotion. Lower prices and less misleading promotion are both likely to improve health care outcomes.) The reform that I would like to see is the development of systems for rewarding companies according to their contributions to health care outcomes. Regards, Peter Dr Peter Mansfield GP Director, MaLAM (Medical Lobby for Appropriate Marketing) peter.mansfield@flinders.edu.au www.camtech.net.au/malam PO Box 172 Daw Pk SA 5041 Australia ph/fax +61 8 8374 2245 -- Send mail for the `E-Drug' conference to `e-drug@usa.healthnet.org'. Mail administrative requests to `majordomo@usa.healthnet.org'. For additional assistance, send mail to: `owner-e-drug@usa.healthnet.org'.