Certainly. And it should be just as fair to allow parallel imports of everything. Want to charge more than [retail price B + transport cost B->A + import tax A]? Guess what, the market is going to take care of this for you.
See the import tax that I included in the calculation? IMO this should be the way to solve this from a humanitarian standpoint. If a government wants to solve medical issues of poor countries, it can work together with drug corporations, dictate the price points (i.e. manufacturing+logistics without R&D) for offering these supplies and then protect the own market through import taxes on these products. But the point here is: It needs to be a transparent, i.e. democratic, process. The way it works now is just shady and anti free market.
It should be priced according to ability to pay based on income. The same is the reasoning why the drug is so cheap in other countries, their people can't possibly afford the prices. So it makes no sense for citizens of wealthy countries to have to pay huge markups if they don't have the money. It makes no sense from an economic perspective to force people to go into bankruptcy just because they got sick.
That's only fair if you believe that the seller has the moral right to maximize their earnings. I think that's questionable across the board, but certainly in the pharmaceutical industry.
As in: the idea behind capitalism (the reason we put up with it) is not that price-gouging is some fundamental right we should worship, but because capitalism works. What's that mean? It efficiently allocates resources. How does it efficiently allocate resources? By letting a fluid market with many competing buyers and sellers figure out an appropriate price.
Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.
I don't know what the best alternative is, but I'm convinced that there are many trivially better solutions to allocating resources to medical research, efficacy testing and production than what we're doing now. Every social network, things like google's pagerank, scientific journal impact ratings - all represent alternative means to determine worth in a competitive fashion; and even competition isn't strictly necessary - for some scenarios plain old raw computation to solve for the optimal solution may be possible nowadays. We're not even trying to improve the status quo.
> Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.
I don't think it is appropriate to compare a drug company that created a life-saving drug to a hostage taker. And in this scenario it is particularly inappropriate, because they are charging less for the drug than the previous best treatments cost!
Furthermore, there is an alternative here. The patent only covers this one cure. You are welcome to go out and spend $2-3 billion to try to create your own drug. (But that would be pretty risky, wouldn't it? And good luck raising the money if you plan on giving the drug away.)
Right, so in this case there was a tiny modicum of competition, and the smart company selling the drug priced their product appropriately.
However, that does not mean that they (or some other organization) couldn't have developed this drug for less.
The question isn't whether it's better that what came before, the question is whether it's efficient. If there were many buyers and sellers, you'd have some faith that is at least approximately efficient.
But with just one seller, they could recoup their costs many, many times over. That's terribly inefficient - those resources could be better used elsewhere.
And it's quite a bit worse than that - by being so inefficient, you're creating all kinds of perverse incentives. Instead of trying to find and create a worthwhile drug, the aim is to find those drugs with captive audiences. The Martin Shkreli saga illustrates that quite blatantly.
The appropriate benchmark is efficiency, not whether the drug at the offered price is better than nothing.
I think there's some middle ground that could be found here. For arguments sake, how about:
1. A drug company can charge whatever it wants for a drug until some predefined multiple of the cost of developing the drug is recovered.
2. After that point, the patent expires and its up to the free market to determine prices.
Set the multiple of R&D costs high enough that it allows for the low success rate of drug research, and you have a model that still encourages risk taking whilst preventing profiteering.
Also, this proposal means that while the patent is not expired, production is still monopolized.
And there is the issue of testing vs. research. There is an argument to be made that drug development isn't the hard part (or at least not always). The hard part is figuring out how to use the drug, and doing clinical trials to prove efficacy and safety.
E.g. we currently live in the wonky situation where there is little incentive to discover new uses for existing out-of-patent drugs. It's much more worthwhile to find a new drug that does the same thing.
I think patents-as-monopolies are a bad idea. A citation-based subsidy and/or fixed license fee, preferably on a decreasing schedule with a capped or only slowly growing integral would align motives with outcomes more clearly.
I mean, I don't see the problem if research becomes independently specialized from exploitation.
One aspect of the patent system is that the government or non profits or whatever could do drug development, get patents and then give away licensing.
Would doing that put an end to commercial drug development? Or would commercial drug makers continue to seek treatments where they saw opportunities to profit?
Sofosbuvir is a really great test of how we reason about this stuff. The price is high and easy to balk at, but it's cheaper and better than the previous treatment. Cheaper and better are clearly compatible with the profit motive. So we are left with our intuition that the price is unfairly high. I think part of the answer is to look at how medical payments are structured.
The best alternative is really quite simple: public funding for lifesaving medicines. This model also works for the provision of medical care and is used throughout the entire developed world, with one exception.
As far as I know, this is not true anywhere in the world. What drugs out there have had their development and trials fully (or majority) funded by governments, either in Europe or---apropos here---India?
Huge, huge amounts of drug discovery is funded by governments[0] around the world. Pharmaceutical companies step in to fund the trials after the promising results come out. A lot of the trials take place in India under ethically concerning conditions[1].
Capitalism uses a low value of human life for workers compensation and a high value when selling drugs. Perhaps we should force the maximum charge to be their lowest paid worker's income for the period of treatment ...
Capitalism allocates resources efficiently without external forces like patents. Patents are a fix to force capitalism to be more socially responsible with sharing of knowledge.
