Given that its insulin and not some new pharmaceutical, I assume the method of making more is available to everyone?
In: Economics
You’re assuming insulin is insulin.
Unlike aspirin which is aspirin, the different insulins on the market are not all the same, and what works well for one person may not work well for another. (Chemically they are different).
There are widely available, *relatively* cheap insulins on the market, but they might be too fast/slow acting, require too frequent injections e.t.c. If the only insulin that works well for you is a relatively recent one still under patent, then you’re at the mercy of whatever the manufacturer wants to charge.
Don’t forget that insulin is not just a single generic drug/formulation. The big players are constantly updating their products, which allows them to maintain a monopoly on their flagship products. A third party generic would inevitably be a substitute for an old version, not the latest. So then the question is how much value consumers place on the improved clinical outcomes of the newest, best insulin products.
Clearly a lot of consumers value them enough that they don’t buy the generics which are available.
First, the science of making more, as in a general understanding of the process, yes is well known.
BUT, the machinery, assembly lines, techniques, and methods needed to actually carry out that chemical process are trade secrets (owned by each private manufacturing company) and not well known. So a company that wanted to start making insulin yes doesn’t have to start from completely nothing, but would still need to invest a lot of time/money into research and development to get that manufacturing process up and running both efficiently and on a large scale.
So, for a company that doesn’t make insulin to start making insulin on a large scale, it’ll likely take a lot of money for them to get started, something companies aren’t willing to due unless they know for sure that it’ll be profitable.
So that leaves the current companies making insulin (In the USA, which is what I’m basing this off of, but the story is similar across the world).
Of which, there are only 3 serving the USA. ([https://care.diabetesjournals.org/content/41/6/1299#:~:text=Currently%2C%20there%20are%20only%20three,began%20to%20save%20human%20lives.)](https://care.diabetesjournals.org/content/41/6/1299#:~:text=Currently%2C%20there%20are%20only%20three,began%20to%20save%20human%20lives.))
So those three companies don’t really face a lot of competition, the USA is large enough where they all can make a profit, and it isn’t like there are a dozen other companies trying to undercut them. It is a lot easier to fight/keep track of 2 other fighters in a fight than 20 others. This also means that prices aren’t in as much competition, all three companies can see that while yes, they could slash their prices and try to steal a bunch of business from their competitors, their competitors could just slash their prices to match in a price war. With the end result being they’re all still charging around the same amount as each other, all just significantly less than before, so all 3 of them are making significantly less money.
Why sell for less and compete, when we can both sell for the same high amount and each get rich?
I want to be rich more than i want you to be poor. So, instead of dropping my price to put you out of business, I’d prefer it if we could both fix a high price. The end result is the same, but instead of selling for bottom dollar, we both sell for more.
Sometimes, Companies can come together to form something like a monopoly. It doesn’t make sense to try and undercut each other when they can form an alliance and agree on a price.
Veritasium has a video on this. It is slightly different, focusing more do on the dearth of innovation, but still does talk about competitors working together: https://youtu.be/j5v8D-alAKE
There’s not actually much competition in the insulin market. Plus pharmaceuticals figured out a long time ago that they can charge pretty much whatever they want it the US.
Monopolies and corporations straight up murdering people in the name of profits. Wall street has been buying up drug manufacturers for years until they own them all, then raising the prices between 800-2000%.
These are practices that would be banned by any honest government. The US government… well that’s the only first world nation in the world that does not negotiate drug prices. For example that $300 USD vial of insulin is $30 canadian dollars and they are still turning a profit.
People die so wall street can buy yachts. And FYI, the #1 expense of drug manufacturing is advertising, not R&D. That insulin was also invented by canada so you can’t blame that at all. They GAVE AWAY the patent because it was too important to monetize. Countries like Canada also got smart and BANNED advertising of prescription drugs. Your doctor can decide what’s right for you or research it online. Saved billions.
Latest Answers