Comment by dkjaudyeqooe
Comment by dkjaudyeqooe 5 hours ago
Although you're right, it's a little misleading.
The point is that governments won't pay any price, they usually negotiate a (good) price given their buying power. As you say they may not buy it, but countries that dictate a price (generally) cannot force a company to supply it.
Ultimately it comes down to market forces, even if the market looks very strange, with essentially one buyer and one seller.
> Ultimately it comes down to market forces, even if the market looks very strange, with essentially one buyer and one seller.
That isn't really a market.
Suppose you have a government that requires everyone to pay for public health insurance, effectively eliminating the market for private insurance because hardly anybody buys private insurance when they both already have public insurance and have paid the money they'd have used to buy it in taxes. Then the government insurance declares the maximum price they'll pay. Is there any meaningful way to distinguish this from price controls? The vast majority of customers can't afford the drug without insurance and the government is the insurance company and is setting the price through regulation.
In particular, notice that this has all of the problems of price controls. There is no real market to enable price discovery, no effective way for customers to switch insurers and thereby punish insurers who pay too much and have high premiums or pay too little and have poor coverage, it's just regulators making up a number and saying take it or leave it.
And even at that, you shouldn't have a problem for generic drugs because then the insurance can just put it out for bids and still have price discovery (i.e. a lowest bidder). But here we're talking about brand new drugs that are still under patent, which have one supplier because they're supposed to be expensive because that's the incentive for the drug companies to fund the R&D and cause them to exist to begin with.