For-Profit Pharmaceutical Companies are Obliged to Chase High Profits


“On the general theory that capitalism is most likely to bestow on society the richest flow of innovative products, Americans have preferred to structure the industry as a set of investor-owned, profit-seeking firms, rather than as rate-regulated utilities or non-profit enterprises… On some occasions, lawmakers and the general public seem to expect pharmaceutical firms to behave as if they were community-owned, non-profit entities. At the same time, the firms’ owners—among them the mutual and pension funds that help to manage the savings of Americans—always expect the firms to use their market power and political muscle to maximize the owners’ wealth. Caught between these inconsistent standards of behaviour is an industry that naturally will never get it quite right.”

[Note:

This paper actually arrives at the conclusion that the solution to our pharma R&D problems (from a US perspective) is price discrimination (i.e. tiered pricing). Further analysis of this section of the article will be posted under a separate title in the ‘Arguments from Pharma’ category (although I’ve never seen these arguments used by Pharma).]

Link to source: http://content.healthaffairs.org/content/20/5/136.full 

Reference: Perspectives On the Pharmaceutical Industry; Reinhart, Uwe; Health Affairs Sept 2001 p136-49

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