Sure and we’d like to have some really cheap drugs which will treat this really expensive disease out there, Covid-19. One part of which is that we can work out how much such drugs will cost to manufacture, if they do indeed treat the problem at hand. Which is what some folks do:
Methods: Minimum costs of production were estimated from the costs of active pharmaceutical ingredients using established methodology, which had good predictive accuracy for medicines for hepatitis C and HI V amongst others. Data were extracted from global export shipment records or analysis of the route of chemical synthesis. The estimated costs were compared with list prices from a range of countries where pricing data were available.
Results: Minimum estimated costs of production were US $0.93/day for remdesivir, $1.45/day for favipiravir, $0.08/day for hydroxychloroquine, $0.02/day for chloroquine, $0.10/day for azithromycin, $0.28/day for lopinavir/ritonavir, $0.39/day for sofosbuvir/daclatasvir and $1.09/day for pirfenidone. Costs of production ranged between $0.30 and $31 per treatment course (10–28 days). Current prices of these drugs were far higher than the costs of production, particularly in the US.
OK, that’s useful and interesting information. For we do indeed want to know what is the marginal cost of another treatment. Whatever the full cost of the drug is, we’re not going to charge that to the impoverished of The Congo. Even a rationally profit maximising capitalist plutocrat wouldn’t do that. The place, the people, are so poor that sales would be zero. So, sell at something marginally above manufacturing cost to at least gain summat.
But our rationally profit maximising capitalist plutocrat, the bastard, would be charging more to you and me, we inhabitants of the rich world. And not just to make profits – rather, to make gross profits which can then make a contribution to the costs of getting the drug approved.
For, to create a new drug – one that you’re allowed to sell – you do not have to just find it and manufacture it. You’ve also got to get it approved. The entire process, research and approval, costing perhaps $1 billion. The peeps out there who use the drug have to pay that $ billion. Doesn’t, particularly, matter whether it’s through taxation – well, it does, because taxation means everyone pays, not just those who benefit – or a higher than manufacturing cost for the drug. But someone’s got to because if they don’t then there will be no new drugs ever.
This is also true if we cut the capitalist plutocrat out of the system. Someone still has to pay the research and approval costs of the new drug, otherwise there will be no new drugs.
At which point we get The Guardian:
Soaring drug prices could bar access to future coronavirus treatments
Impressive, don’t you think? Entirely and completely misunderstanding the point. But then this is The Guardian and economics. If we don’t have high drug prices for the current set of newly found treatments there never will be any new treatments ever again. Thus that headline is exactly, precisely and completely wrong. But, you know, The Guardian and economics. Heck, The Guardian and numbers.