[cmdli]

For many (most?) drugs, the actual cost to produce the drug is usually far less than the selling price as it is an enforced monopoly. Given that monopoly, price restrictions don't actually restrict supply as the single supplier will still try to sell as much as they can to make as much as they can.

[nickff]

It probably wouldn’t have much of an impact on the sales or marketing of this product, but it’d definitely have significant impacts on drug manufacturers’ future plans (by reducing expected ROI & discouraging the development of ‘marginal drugs’).

[Eisenstein]

Would it? Drug manufacturers don't really do as much 'R&D' as we assume, they buy biotech companies that have already discovered drugs. Also, why would a company stop wanting to make money? 'We are only going to make $5billion instead of $15 billion, let's not bother with that one.'

[hackerlight]

> 'We are only going to make $5billion instead of $15 billion, let's not bother with that one.'

Well, yes. If there's a 10% chance of success, these differences matter. Decision making happens at the margin.

[Eisenstein]

How would they know how much one drug would make vs the other while in the research phase?

[hackerlight]

Private capital doesn't get allocated based on omniscience of future outcomes. It's about approximations of risk to reward in an environment of uncertainty. If you add risk or reduce reward of biotech, you get less private capital in biotech. Investors will allocate in other sectors with better risk to reward.