this post was submitted on 21 Oct 2023
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Isn't it just this expensive because the government can't negotiate prices? So the insurances will pay a normal price but when the government is paying it'll cost more
That's Medicare that you're thinking of, and they can now negotiate prices. The big one is EpiPen-type products.
No, it’s expensive because the value it provides.
They’re positioning it based on the length of hospital stay it prevents. In that perspective, this is an absolute bargain. For the most part, they’re selling insurance that $1.4k is far cheaper than even one additional night in the hospital. Insurance is willing to pay because it saves them loads of money. For uninsured and underinsured, it sounds like they’re basically not charging.
Only point I'd add is drugs cost more than they are to produce because of R&D costs, which must be recuperated. If costs are high, and volume is low, it means larger markup over the cost to manufacture.
The R&D costs were largely already paid by tax-payer funded research grants and, in this case, additional emergency funding from governments. This is especially the case in the US, where the government is also legally required to hand over patents for government developed drugs to private companies that did none of the work.
Pfizer spent $2 billion dollars in R&D just in 2021 on the drug. The US government & public agencies overall funded $35 million for help with clinical trials. I don't think it's intellectually honest to claim that the majority of R&D costs was directly paid by public grants and taxpayer funded research, which is money spent without the expectation of any produced product in hand.
The US government helped speed up the process, reducing R&D costs with the emergency use authorization, and had a contract of $5.3 billion to help buy tens of millions of doses for Americans. I suppose you could make the argument that some of that indirectly helped fund R&D, but then so does every other non-American customer when they pay for a product, which is how the system is supposed to work.
Where exactly are you getting those numbers? They seem rather suspect. The first example that I was able to find, for example, put US government investment at $30 Billion on vaccines alone (https://www.kff.org/coronavirus-covid-19/issue-brief/how-much-could-covid-19-vaccines-cost-the-u-s-after-commercialization/#:~:text=The%20federal%20government%20has%20spent,charge%20to%20the%20U.S.%20population.)
It’s generally a myth that cost to produce has anything to do with market prices.