I'm a Pharmacologist and I've worked in a number of Biotechs. I have been part of pricing discussions to value our drugs and your assessment is correct — price discrimination, as in most industries, is based on what a particular market can bear. Factors that influence this are the way that healthcare systems are run (i.e. public healthcare, insurance based), the cost of compliance and competition. I wouldn't say that the industry subsidises poor countries via sales in the developed world, it's more a case of it's better to be paid something rather than be paid nothing. I personally, however, do like the happy side-effect this has for patients in poor countries.
Increased regulation costs more to comply with and that cost of course is born by the consumer. The cost of regulatory compliance also varies on the market you sell to, the US being one of the most expensive. Just as with software or hardware, the price reflects the cost of production and maintaining the product.
Notably with biologics (Insulin, any hormone ...) as opposed to small chemical entity (paracetamol, aspirin etc) is that broadly they are harder to keep in their stable active form. The are heat sensitive, chemically sensitive and have a tendency to stick to themselves. This tends to increase the cost of storage, logistics and compliance. It also means that if you can make a worthwhile biologic it will generally experience less competition.
Sometimes I wonder if some HN comments are being posted from an alternate universe...
As a Type 1 Diabetic, this cracked me up. I regularly get sent articles and have conversations with friends about "research on such-and-such cure for Diabetes!" Ten-to-fifteen years, right? Add it to the pile. Call me when something's on the market.
> cost
Typically for most drugs it really just means they extract less profits from developing countries (slim margins), not that they sell for a loss, while making lots of money with large margins in developed countries.
Every big pharma/biotech I've worked for has always pushed the FDA to make exceptions to the rules. They certainly aren't push for more of them.
Did I understand it correctly? Why is it so?
That said, I understand why the laws have been shaped the way they have.
I have the highest doubts that they'd have the resources to do the broad-based clinical trials required to go to market.
Look up "Eroom's Law" which is "Moore's Law" spelled backwards: http://www.nature.com/nrd/journal/v11/n3/fig_tab/nrd3681_F1....
Basically, the increases in pharma regulation means it takes longer and gets more expensive to create a new drug each year.
This is a cool science project, but the reporting around it is sensational and not helpful to the millions of people with diabetes who have their cranks yanked regularly about miracle cures, cost-saving fantasies, etc.
To address some raised in sub-threads:
+ You can get extraordinarily cheap drugs in India, the rest of the developing world, and in parts of Europe. The "greedy" drug companies adjust pricing to what local markets can bear. So instead of letting poor people die en masse they mark the drugs down and pass the cost onto the developed world. Fair trade IMO.
+ The reason there are so few generic insulins is that they are hard to make consistently enough to please the FDA and European regulators. Companies like Teva and Perrigo are multi-billion dollar manufacturers of generic drugs who would love to get get into this game, but as noted, biosimilar drugs, especially ones as powerful as insulins, are a lot harder to copy than aspirin.