09 June 2017

Penny Wise is Pound Foolish

Here's a tweet that some have professed will lower drug prices. The notion, just use less. No.

The problem with drug prices, to some extent actually true, is that most of the price (the part which reflects cost recoupment only) goes to paying amortization of the R&D and approval tasks. The variable/marginal cost of 99.44% of drugs is in the noise. The chargeback from the CxO suits amounts to more.

So, no, using less will only *raise* the unit cost. Accounting is boring, but often correct.

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