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Commentary

Goldilocks Pricing
Richard Tren, Roger Bate, Tech Central Station, 2-27-06

Bate and Tren wryly observe that AIDS activists who have campaigned for pharmaceutical companies to lower prices for innovative new AIDS drugs are now complaining that some companies have lowered them too much, thus hurting the profitability of generic companies that make cheap copycat versions of those same medicines.

Ironically, activists’ only display of common sense is recognizing that generic companies need reliable profits if they are to stay in business. Their fondness for market economics evaporates, however, when it comes to the research-based companies. But activists cannot have their cake and eat it too. If innovative companies can’t make a fair return on their investment, they will eventually decide to spend more of their time and money researching more profitable products.

The worry is that HIV/AIDS is increasingly seen as a charity disease and only worthy of corporate social responsibility programs. Ensuring that there are profits to be made from HIV/AIDS is probably the best way to keep companies investing and researching, for without that, the prospects for the development of the next generation of AIDS medicines look increasingly bleak.
So while activists may grab headlines by either complaining that drug prices are too high or too low, they would be of more use if they figured out how [Bristol Myers Squibb], Gilead and all the other research-based companies out there can make a profit from AIDS and sell their products more easily to those who need them.


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