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2) Drug companies tried to defend higher prices in Australia on the basis
that R&D costs should be distributed equally amongst all consumers. This
ignores the fact that only 15% of the cost of a drug is R&D, whilst 40% is
marketing (ref: the Economist a few months ago). Australians would be happy
to share the R&D costs equally if they didn't have to pay for all those
dumb Purple Pill ads on American TV that don't get aired in Australia.

I would add to the Economist's analysis the following data

The majority of the retail price of a drug is cost recovery from
prior investments in drugs that *didn't* make it to the
counter (either over or behind).  I'll dig up the reference, but
it came to me via my wife, who is a pharaceutical chemist, from
her Medicinal Chemistry class.  I'm sure she still has the
original reference.

So when one buys purple pills, one is paying for prior pills
that turned out to be *really* expensive rat poison.  ;-)


Charles Hamilton, PhD EIT               Faculty Fellow
Department of Civil and                 Phone: 949.824.3752
    Environmental Engineering           FAX:   949.824.2117
University of California, Irvine        Email: chamilto(--nospam--at)

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