[efitz]

It takes a lot of money to bring a drug to market. Those costs have to be recovered and there has to be a net profit or no one would do it.

Pharma companies charge different prices for drugs in different markets. Markets with single payer systems usually restrict expensive drugs (either not permitting them or restricting their use to fewer cases) and/or cap prices. Some countries don’t honor pharma patents. Together these controls may make the drug unprofitable in many markets. Someone has to pay full price to make the drug research net profitable, or the pharma companies reduce research into stuff they lose money on.

It happens that the US market is favorable for pharma companies to recoup R&D costs by charging more than most anywhere else. This is possible because of the US regulatory environment and heavy lobbying by pharma.

This is what is meant when someone says that the US “subsidizes” drug costs for the rest of the world.

Note that I am not saying this is a good system; I’m just attempting to describe it.

[beej71]

[Not disagreeing with your post, for the record.]

> It takes a lot of money to bring a drug to market. Those costs have to be recovered and there has to be a net profit

A friend of mine who works in this industry explained how they come up with drug pricing and whether they decided to bring a drug to market. It's pure capitalism, of course--and why shouldn't it be?

It's a bummer, though, to think of the drugs that could have really, really helped some people but weren't lucrative enough to bother selling. Oh well!

> or no one would do it.

On the other hand, that's sort of like saying "There has to be a net profit in going to the moon or no one would do it" or "there has to be a net profit in selling flood insurance or no one would do it". Neither of those net a profit, but sometimes does it all the same.