cgf wrote:I would like some examples of natural monopolies that were able to last on their own? Let's talk about these monopolies that are responsible for these exorbitant prices. I'm going to start by focusing on big pharma since that is the field I know the most about, know the most people in and understand best. The industry spends between 1-5 billion dollars per drug that gets introduced every year, depending on who's numbers you're using. What it would cost to actually develop a drug would be closer to 10 million, another 10 to test it to satisfaction so a total of 20 million ish with no FDA approval, just a safe enough drug that you'd give it to a friend with a terminal illness. That's a thousand times less than what companies actually pay. While the loss due to bureaucracy that big pharma incurs plays a part in that the major difference is the cost of the FDA.
Why is the FDA so costly? Well first of all their procedures are remarkably costly in and of themselves, but also they result in so many delays for the most moronic possible reasons. What happened to a company that the lab I was with was working with was that their drug was at the human testing stage and in one of the studies they suddenly got a weird side effect, namely that one patient had experienced a peculiar discoloration around her breasts. If you saw the pictures this discoloration just so happened to look exactly some grabbed her breasts but because this woman refused to admit that they had to wait another 3 months for more costly testing to go down and for the drug to move on. That's just one story of simply pointless delays that end up costing the people who will need this drug.
Now the completely legit question is that if there were no FDA to incur these costs why wouldn't companies just skip the testing and pocket the 10 million they'd have to shell out to do that testing? Well first of all releasing an unhealthy drug will not only lead to lawsuits, but will give you a **** reputation and thus hurting your sales. You'd also have a much harder time convincing people that they need your drug if people knew that you released one unsafe drug.
Additionally this would create an industry of experts who would review these drugs. Which would have great control over sales which would force the drug companies to gather enough evidence that their drug is safe and would also create a whole new series of jobs.
I've gotta get to work so I'm going to wrap here and hope yall have as much fun with this theoretical discussion.
I don't know where you get the 5 billion dollar number. The most cited paper puts the average cost at 800 million (even after amortizing cost of failed drugs) while a never study gets 1 billion.
Here is the link:
http://healthcare-economist.com/2010/02 ... 1-billion/
I am not sure where you get those 10 million plus 10 million numbers though. I think you are overly simplifying things.
I am also not sure about your what if there was no FDA story. What does a safe enough drug mean? Even with FDA, we get into trouble. Remember Vioxx?
Check this out: http://en.wikipedia.org/wiki/Rofecoxib
"In the year before withdrawal, Merck had sales revenue of US$2.5 billion from Vioxx".
The company that produced the drug that recently merged with another one in a 41 billion dollar deal. Still in business. Making great money while many people lost their lives to the drug. So I do not buy your reputation, let the market and reputation dictate approach. We are talking about actual lives here.
oh well what could have been.
stone him! 