A Simple Question About The Pharm Industry.

[O C Diver]

As to "excess" profitability of the pharma industry, I'll let you be the judges.

Here are the 3 year average figures for Return on Invested Capital after goodwill depreciation (ROIC) for various pharma companies:

Abbott: 14.4%
AbbVie: 29.0%
Amgen: 36.4%
Astra Zeneca: 6.8%
Bristol-Myers: 26.7%
Eli Lilly: 33.8%
Glaxo Smith: 24.1%
Merck: 29.2%
Novartis: 8.5%
Novo Nordisk: 132.7% (sic)
Pfizer: 12.7%
Sanofi: 8.6%

Source: Valuentum Secutities Inc.

Hope this helps!

So, 75 years ago, without most of these drugs, you died, lived in pain or couldn't rise to the occasion. Companies come along, invent, produce and then improve drugs to solve a lot of maladies. 75 years ago, people would have given anything to have these drugs. Now, they're an entitlement?

When do we get to the point where legal services become an entitlement instead of 3 to 4 figures per hour?

Ted

 

[SteveK]

calculators. allow $1,000,000 Can$ = $750,000 US for a single person no dependants comparison. I pay $536,000 (373,626.55US$) and you pay $262,000 (375,861CAN$)
Neither one of us are at 50% tax

https://www.eytaxcalculators.com/en/2019-personal-tax-calculator.html

https://goodcalculators.com/us-salary-tax-calculator/

correction I keep $536,000 pay $463,950 ($323,705 US$)
My earlier point was we do not pay 50% of income.

 

[JoeCanuck]

So, 75 years ago, without most of these drugs, you died, lived in pain or couldn't rise to the occasion. Companies come along, invent, produce and then improve drugs to solve a lot of maladies. 75 years ago, people would have given anything to have these drugs. Now, they're an entitlement?

When do we get to the point where legal services become an entitlement instead of 3 to 4 figures per hour?

Ted

I am not making any representation whether profitability is excessive or not. I am just giving some information on actual returns registered by major pharmas.

Returns will be excessive if the research risk pharma co's are underwriting is not commensurate with the return on invested capital they are producing. And if it's indeed excessive, it should attract new players in the field, increase competition and lower the returns. At least, that's what the theory says.

Frankly, I am not knowledgeable enough to have an opinion on a "fair" level of profitability. Just giving facts here, with no special effects or axe to grind...

 

[menzies]

correction I keep $536,000 pay $463,950 ($323,705 US$)
My earlier point was we do not pay 50% of income.

So you pay 46.4%

 

[SteveK]

So you pay 46.4%

well no, of course not, I have deductions, just trying to show we do not pay 50% of income for pharma/medical, maybe 10%?

 

[menzies]

well no, of course not, I have deductions, just trying to show we do not pay 50% of income for pharma/medical, maybe 10%?

My point was that you folks in CA are not paying $13 for drugs that cost $600 in the US.

You are paying, indirectly, a lot more.

 

[SteveK]

Agree to disagree. There is more to our free medical system than $13 drugs. The $13 is the co-pay that you know well. It is the user pay portion. But enough of this. Time to celebrate the cure for covid being found.
Thanks to France, Australia and China. Now breaking news

Israeli generic drug giant Teva announced Friday that it will provide ten million doses of its anti-malarial drug hydroxychloroquine, which could potentially prove effective in fighting the coronavirus pandemic, to US hospitals free of charge.

 

[menzies]

Agree to disagree. There is more to our free medical system than $13 drugs. The $13 is the co-pay that you know well. It is the user pay portion. But enough of this. Time to celebrate the cure for covid being found.
Thanks to France, Australia and China. Now breaking news

Actually sounds like you and I agree.

 

[FF]

"The $13 is the co-pay that you know well."

Many of the Canadians here in our little area of Florida would disagree.

The biggest co$t is delays for testing, specialists , and operations.

The US border side is loaded with walk in specialists for the Canadians that refuse to die in line.

Crash your car ?, no problem, get a disease , head south.

 

[SteveK]

Many of the Canadians here in our little area of Florida would disagree.

The biggest co$t is delays for testing, specialists , and operations.

The US border side is loaded with walk in specialists for the Canadians that refuse to die in line.

Crash your car ?, no problem, get a disease , head south.

Of course, but you have a concentration of those that can afford to be in your area that do not represent most. Just the same as Americans crossing the northern border to obtain cheaper drugs do not represent most Americans

 

[markpierce]

The prescription drugs I consume are inexpensive. I pay $10 for a 90-day supply for each prescription. Medicare pays less than I for their co-payment. Yet I pay Medicare many times more than what they contribute toward me for drug coverage.

If anything, foreign governments should pay more to offset our subsidy to them.

 

[menzies]

If anything, foreign governments should pay more to offset our subsidy to them.

Not sure I understand that. What subsidy are we giving them?

 

[AdkChris]

It is also feasible to price shop for a cell phone.
It is very difficult or impossible to price shop for medicine or medical care.
Getting sick is not something you can plan for in a specific way. How do you shop around for the best price for every possible illness you might get. Once you have a particular sickness there is very little time to learn about the options.

At the very least is seems obvious to me that medicine and medical care are a different type of market. It would be a step if we could just reach an agreement on that.

 

[Tator]

Besides the enormous rises in price for insulin over the last few years (I'm sure development costs were recouped decades ago), check out the rise in prices for nitro tabs. 20 years ago I paid around $5 a bottle and that was the uninsured price. Now I pay $35 and I'm on Medicare with a good part D plan. I only have them in case I need them-quintuple bypass 28 years ago. Supposedly they expire after 2 years so have to keep getting them refilled and throw away the old ones.

Tator

 

[SteveK]

Besides the enormous rises in price for insulin over the last few years (I'm sure development costs were recouped decades ago), check out the rise in prices for nitro tabs. 20 years ago I paid around $5 a bottle and that was the uninsured price. Now I pay $35 and I'm on Medicare with a good part D plan. I only have them in case I need them-quintuple bypass 28 years ago. Supposedly they expire after 2 years so have to keep getting them refilled and throw away the old ones.

Tator

Unrelated but similar. Insurance jobs cost more than when the customer pays experienced first hand.

 

[menzies]

Unrelated but similar. Insurance jobs cost more than when the customer pays experienced first hand.

Happened to us just two weeks ago.

My wife lost her glasses on vacation. We previously got them from Costco Optical but then had to manually file against our vision insurance since Costco is not covered in their Network. The cost of the spectacles was around $270.

This time we decided to avoid the hassle and go to Target Optical, which is on the network and they dealt with the insurance.

Total cost was over $650, with $254 out of pocket. I was walking around the store while my wife dealt with the payment. As we left she gave me the receipt. I was shocked. We immediately went back and cancelled the order. Initially the missus couldn't understand why as we were paying less than before until I explained that OUR insurance was paying a hell of a lot more.

 

[menzies]

https://news.sky.com/story/coronavirus-johnson-johnson-vows-to-make-not-for-profit-vaccine-11966292

 

[Larry M]

Sorry the thread’s been closed. We know these are difficult times. Thanks for understanding.

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