Bro, were you born in a socialist barn or something?
It’s better, from a capitalist’s pov, to sell something to a single person for a grand than it is to sell to a hundred for a dollar. Especially if that keeps misery high.
Imagine prior to Obama Care where an insurance company could deny you for having a preexisting condition.
Medical science: with this we could cure everyone in earth of the disease for only $20!
Pharmaceutical industry: Okay that goes in the vault forever. Now make us one that just treats the symptoms and we’ll charge $5,000 a month for it.
This would be terrible business if any pharma worked this way. The vast majority of potential treatments fail either in the lab or in early phase trials. It is not very likely that’d you’d be able to on-demand develop a novel treatment for symptoms before one of your competitors figured out your already-discovered cure. That would be unless you patented the cure, but by the time you spent years developing a new symptom-only treatment and testing it through each phase, you’d have a few years at best before your exclusivity on the cure patent expires and thus your treatment becomes worthless.
Pharmas are run by the same short-sighted wall streeters as every other corporation. Actually successfully executing this sort of long-term plan would require thinking further ahead than a few quarters, which they are not capable of doing. A new cure is a big stock boost now that they could never resist.
It was a hypothetical. In reality they’re not finding many actual cures in the first place because they’re seeking rents not cures.
Rent seeking is not applicable for any company developing new medicines because that by definition is creating new wealth. I wouldn’t disagree with that characterization for any company milking an out-of-patent treatment by trying to make it unfeasible for any other company to manufacture it. You are correct that does exist.
Cures are difficult to develop due to how variable human physiology is, but we still manage to do so. Vaccines are also a way more effective instrument for disease eradication; it’s better to prevent anyone getting the disease in the first place.
When the choice is die or be price gouged, people take the second option. Insurance likely pays this all in weird ways too. I’m sure some numbers were crunched to work out how many people they let die and how much more profit it’ll make them.
But if they have more customers then they have to spend more resources making more product. So 1 customer at 1000x the price is more valuable than 1000 customers at the a lower price. If it costs 28 dollars to make a year’s worth of doses like this screenshot claims, then they’d make $42,222 charging a single customer the current price, while they’d only make $12,000 charging 1,000 customers the proposed price.
So for the company to make more money than they are now, they’d need 3,519 new customers for every one current customer. Since Google says there are 1.2 million people with HIV in the United States, if they have more than 342 current customers in the united states, they are making more now than they could ever make at the proposed price. Therefore the amount of new customers is almost certainly not worth it to them.
Money seems to ruin pretty much everything about healthcare.
Just to expand your math in a different direction, going from 342 customers to 684 adds $9576 in costs, but cuts the price by 1/2 (plus $28). $21,139.
Going from 684 customers to 1368 adds another $19152. They break even at a $10,598 price point.
From 1368 to 2736 customers adds another $38304 in costs, but reduces the break even price point to $5327.
From 2736 to 5472 customers, another $76608 in costs, and a break even price point of $2685.
They are recouping all their additional costs, and making exactly the same profit charging 5472 people $7/day instead of 342 customers $115/day.
How many of those 1.2 million HIV patients can afford $7/day? If just 1% of them are willing to pay $7 a day, they will more than double their profits.
It doesn’t work that way at all.
Pricing strategy generally calls for optimizing return. They calculated that this company has 342 customers. Each customer adds $28 in costs. The unknown is how many additional customers will choose to buy at a particular price point.
If we halve the price paid by the customer (and add $28 to account for our increased costs) will we at least double our customer base to 684?
If we halve that price again (and add another $28), will we at least double our customer base again, to 1368?
At some point, lowering the price any further will not gain enough customers, and that is the minimum price we can charge while maintaining our current profits. The article went well beyond that point, contemplating a price point that would provide only 30% of their current profits.
If they lowered their price point to, say, $2700/yr, they would only need to add about 5100 new customers to break even with their $42,222 price. I think they would attract a hell of a lot more than 5100 new customers at that price point, meaning they would be radically increasing their revenue and profits. They are currently earning far less than they could be by demanding so much.