Or, a government could just say:

If you want to operate as a pharmaceutical producer / seller in this country, you have to supply this list of emergency medicines at 10% above the price we can import from China / India.”

And be done with it.

Edit: fixed a typo

That's a good way to get _nobody_ operating as a pharmaceutical producer / seller in this country.

I mean, I'm talking about maybe a few life saving emergency medicines. Capping the price and allowing / encouraging / requiring other manufacturers to sell in the market.

What availability would those producers need to provide? Some quota of supplies? Low prices don't matter for much if there's a shortage, and there _will_ be a shortage of cheap emergency medicine if the companies that produce it can get away without spending too much on the unprofitable requirement. (and if it were profitable they'd do it anyway, without need for government requirement)

I worry that requiring a pharma company to provide supplies hurts anyone who wants to start up a new pharma company. It's easier to comply with government regulations once you're a big company and have many plants, but new companies have to be lean or else they'll never make it off the ground.

I don't have a wholly formed drop-in solution for the current problem, though it certainly does seem there is a problem.

No amount of well-that-isn't-going-to-work thinking is going to help.

Try something, if that doesn't work try something else.

I believe the fashionable word is iterate.

I agree with your spirit but I suspect your proposed solution is worse than status quo. Also, total aversion to criticism isn't how one iterates.

Society isn't some laboratory where you can run experiments to your heart's delight. Decisions have consequences. Harming the market for medical research is particularly insidious, as its costs are very real but hard to see: all of the people who will be worse off because the treatments they need are not invented.

> Decisions have consequences.

Like, for example, the decision to increase the price of an Epipen to US$300 in the USA, whereas the same product in Australia costs AU$100

> Society isn't some laboratory where you can run experiments to your heart's delight.

In a way that's what policy and regulation are. Since we can't know the full consequences of policy and regulation until they're implemented and time passes. Sure, most policy and regulation aren't willy-nilly.

Trade-offs I guess. Regulate the sale of some emergency medicines so that those who need them now can afford them at the expense of, what exactly? It's not like regulating the sale of one medicine is going to break a pharmaceutical company?

Why do I feel like I'm trying to defend sensible pricing here? Are people really that allergic to the word regulation?

Or, a government could just say...

Why not both? I'm serious. It seems like a good idea to promote competition and put a ceiling on the prices of essential medicines based on the global market. 10% above the lowest price may be a bit aggressive, but something must be done to stop these 10,000% markups we're seeing now.

Cue pharma & equipment companies complaining about R&D costs for patents and approval processes.

Of course, they still complain and somehow shoehorn busdev & marketing costs into the R&D bucket anyway.

What R&D costs are there for existing, well established, proven emergency medicines for their current uses?

So that explains T-Mobile's Un-carrier play.

Any studies you can link to?

See [1], section "Number of competitors", page 12. This isn't a policy document, but an EU study. An interesting result in that paper is that low interest rates make tacit collusion more profitable. We've been in a period of very low interest rates for some time now, which increases the number of competitors for whom tacit collusion pays.

As before, collusion is sustainable if and only if firms put a sufficient weight on future profits. The critical threshold for the discount factor, δ, now depends on the number of firms: the more competitors there are, and the higher this threshold, meaning that collusion is less and less sustainable. For example, the threshold increases from 1/2 = 0.50 to 1/3 = 0.67 when the number of competitors increases from 2 to 3. This means that if the firms’ discount factor lies around 0.60, say, two “competitors” could in fact maintain the monopoly outcome but three or more competitors would have to price at cost.

[1] http://ec.europa.eu/competition/mergers/studies_reports/the_...

But there are at least 4 competitors

Maybe they are in a metastable state, they are not forced to compete and no one is losing market share?

Doesn't apply to hard drive and DRAM mfrs (before the last decade of consolidation).