Home Forum Political Economy Beating the hell ouf of the average Reply To: Beating the hell ouf of the average

Jonathan Nitzan
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Some breakdown of U.S. drug cost, based on:

Sood, Jeeraj, Tiffany Shih, Karen Van Nuys, and Dana Goldman. 2017. The Flow of Money Through the Pharmaceutical Distribution System. Los Angeles, CA: USCSchaeffer Leonard D. Schaeffer Center for Health Policy Economics.

According to Sood et. al., a $100 drug in the U.S. costs only $17 to produce. The rest goes to the pharmaceutical firms and various intermediaries. A full $23 of the $100 is earned as profit — $15 by the pharmaceutical firms and $8 by the intermediaries.

This figure, also from Sood et. al., shows the 2015 net profit margins — i.e., net profit as a % of sales — in various U.S. sectors. Brand pharmaceuticals lead the pack, with generic firms following not far behind.