response 8 of 14:

Feb 17 17:11 UTC 2006

Re 6: NPR did mention such a clause. Apparently the law says drug
companies who use public funds to research drugs are required to sell
those drugs at "reasonable prices". The story pointed to the Drug
Company's campaign contributions as a major reason why "reasonable
prices" is not defined.

I have had a hypothesis for quite a while that the capitalized system of
medicine in the United States makes the socialized systems of other
countries possible by providing an avenue for companies to recoup
profits lost in markets where prices are fixed by the governments. Let
me explain a little better with an example: 

Let's say company ABC makes Drug-X. It took $800 million, and 10 years
of research to create Drug-X. Since it is a new-chemical (NCE) drug, the
patent's exclusivity clause dictates a period of 5 years (after that,
other companies begin making generics, which means ABC will only be able
to sell Drug-X for slightly above manufacturing cost). In order to
recoup the money spent developing the drug, and show a reasonable
profit, ABC Company determines the drug needs to cost $5000 per year per
treatment. We will also assume that the demand for Drug-X dictates a
worldwide market, but the problem arises when some nations with
socialized medicine prohibit ABC Company from selling Drug-X for
anything more than $3000/yr/rx. ABC can not afford to simply not sell
the drug in those countries, because the demand does not exist elsewhere
to offset the loss of sales. Thus, ABC does the only thing they can do;
they raise their prices in the United States to $7000/yr/rx.

Like I said, this is only a hypothesis. I have not tested it, and really
do not have the time to research it. But if it turned out to be true, it
would explain why some drug prices in Canada are so different from the
United States. It would also explain the drug company's opposition from
allowing Americans to buy Canadian drugs. And it might even lend
credence to the argument that socialized medicine in America would not
work as well as it works in other countries.