WSJ: Drugmakers Find Competition Doesn’t Keep a Lid on Prices

Drug price increases will likely bring more regulation in the future. In the short run that is probably not the case. The balance of power in Washington can change very quickly. 


Drugmakers Find Competition Doesn’t Keep a Lid on Prices

*Link may be behind the Wall Street Journal paywall. Try pasting the title in a Google Search


“The two companies, though rivals, followed a common industry practice: raising prices almost in lockstep.”


““You’re not rewarded for having a low price and for the most part, the market doesn’t punish a high price,” says Mick Kolassa”


“The freedom to raise, rather than slash, prices in the face of competition is a big reason why U.S. prescription-drug spending has surged by close to 10% on average annually in recent years to $310 billion in 2015”


“Tandem drug-price increases for other ailments have prompted lawmakers to call for investigations into potential collusion.”


“Tandem increases can be perfectly legal, so long as companies don’t confer with each other, says Herbert Hovenkamp”


“In compliance training, companies tell employees not to discuss pricing with rivals. But when it comes to drugs, list prices are public.”


““Any profit-optimizing company is going to want to get as much price as they can get,””




Pricing: Book + Ebook



For just $4 more one gets the Ebook. Buy both and it’s like getting a $6 discount. You could also look at it as Buy the Ebook and for just $10 more getting a physical copy of the book. Shipping is $5. Special Priority shipping is $10.

$6 discount / $25 discounted cost = a savings of 24% for buying both.

For $25 I ordered both the book and Ebook. It is unclear how one gets the Ebook. There was no download included at checkout. That part of the story is to be continued.

What is 2011?


“The Year of Solving Other Peoples Problems”

Tagline: “What’s Your Problem?”

*This came about after thinking about how camera apps could create a viable business model. This coming year should be about solving problems other people have. People may call it service. Most of the time it is a service, there are a few times where it is an idea that is implemented and that scales and creates massive value for the user. The creator gets a healthy reward for creating so much value for the customer.

Example: Supplier creates a product that crates $1M in sales for their customer with a net profit of $250,000 (25% net margin). Regular net margin is 10%. This product is creating $150,000 in extra net profit. Perhaps a third of that will go back to the creator of the solution that created a million dollars of business and created the opportunity to grow net profits $250,000. If the supplier takes a third of the excess, that would be $250,000 NPM – $100,000  SPM (Standard Profit Margin) = $150,000/3 = $50,000. There is an incentive to create excessive value and profit for their customer. Think of the 1/3rd as being a performance bonus.

*Still to be figured out.

Q: What if the buyer is OK with a 10% SPM and uses the savings to drive market share and be more competitive versus their competitors?

A: These things will have to be negotiated and put in writing.