[jsjohnst]

I think you are jumping to a conclusion without having enough supporting evidence.

Regulation on drugs didn’t suddenly get 8,000x more expensive for drug companies in the last few years.

An alternative theory, which I can’t prove any more than you can prove yours, is that due to some pharmaceutical companies realizing they were leaving serious money on the table, they tried hiking prices. Once they realized there would be little repercussions, all jumped in and we have a new industry norm.

[notyourday]

It contradicts basic economics. If you raise prices 8000x and I will go into competition with you and raise prices 7999x i.e. do what MCI did to ATT and Vizio did to Samsung.

[yequalsx]

Not if there is collusion or cartel pricing. There are also regulatory means of limiting competition. The basic economics notion works in a market that is mostly free. I suspect that most things related to the American health care system do not qualify as a free market.

[notyourday]

There's no cartel pricing in medicine. If there was there would be a competing cartel as it is the case everywhere.

The reality is that companies that make generics are simply too small to be able to compete with Pfizer, Merc, Glaxo etc and for all big talk our scientists in R&D and FDA are bought and sold like trading cards and their opinions change with the opinions of their owners, which is, for example, why FDA accepts garbage studies from Pfizer and does not from itty bitty company that competes with it.

[yequalsx]

Your view of economics does not match reality.

A survey of hundreds of published economic studies and legal decisions of antitrust authorities found that the median price increase achieved by cartels in the last 200 years is about 23%.[1] Private international cartels (those with participants from two or more nations) had an average price increase of 28%, whereas domestic cartels averaged 18%. Less than 10% of all cartels in the sample failed to raise market prices.

Cartels do exist and do not always have a competing cartel. Especially if the cost to entry is too great for a competing cartel to get started. There is also the fact that competition doesn’t just instantly occur. There is a lag in the market and during the lag cartel pricing occurs.

It’s not some immutable law of the universe that completion always springs up in economics. This isn’t always the case and it isn’t always the case that a cartel, oligopoly, or monopoly will instantly lose its pricing power simply because a new player arrives. Sometimes the new player gets absorbed, or becomes part of the cartel.

Quote above from

https://en.m.wikipedia.org/wiki/Cartel

[notyourday]

My view of cartels matches non-academic reality. Here's one:

OPEC

here's a non-member ( which is basically a cartel by itself) fucking it for them:

US

Here's another cartel:

Siemens and Mitsubishi Heavy Industries

Here's a competitor: Hyundai Heavy Industries

When real world meets economic studies, economic studies get clobbered

[yequalsx]

You wrote:

If there was there would be a competing cartel as it is the case everywhere.

Providing two examples of where there are competing cartels is not an argument that this phenomenon occurs everywhere (emphasis originally yours). Your logic is off.

[jsjohnst]

In the examples you gave, they were huge markets and they were ripe for disruption. As the article laid out, most of the drugs which have experienced this huge hike are ones with very limited markets. It’s not worth it for a pharmaceutical company to jump into a new drug with almost no market for it.

[notyourday]

Medications blow electronics market out the water.

[jsjohnst]

That’s such a vague statement you could either be wildly wrong or mostly right. If you’re talking average profit margin, yes medications generally have higher, but electronics are fairly good margins generally too. If you’re talking market cap / overall market size, you definitely aren’t correct. Even the biggest pharmaceutical company pales in comparison to the electronics top three.

[Retric]

You don't get competition on day one, and one week of 8000x prices is worth more than 10 years of 1x prices. However, you can and will drop prices when competition shows up, so you see 8000x profits when competitors see a competitive market.

[notyourday]

neither AT&T nor Samsung were able to do it against MCI or Vizio. But, sure, lets pretend it is different this time.

[Retric]

AT&T did not have a total monopoly and the ability to charge 8000x prices. Remember the drug company is already ahead even if they never sell this drug again. That's not true of less extreme price increases.

[jsjohnst]

During the days where MCI had a pronounced savings over AT&T (aka mid to late 90s), it was only 5-6x difference [0]. Based on that, I agree, totally different ball game with pharmaceuticals (like 3 orders of magnitude difference).

[0] Source: I worked for MCI during that era. When we were selling flat rate 10¢/min, most of the folks we talked to were paying 40-60¢/min with AT&T for intra and inter-lata calls. Folks thought the price was so low that there was some hidden charge or it was some kind of scam. Of course AT&T (pre-SBC acquisition) responded and dropped their prices, but they took a long time to do it.