Measuring price increases

["Joseph J. Esposito" <espositoj@worldnet.att.net>]

A similar fallacy could be made with US drug pricing, which has far
exceeded the growth of state, federal, health insurance, and other health
budgets.

I saw the transcript of a presentation a couple years ago that showed that
the growth in the U.S. pharmaceutical industry since WWII was about equal
to the cost of capital.  In other words, the industry as a whole did not
make money.  Obviously, some individual companies (Merck, etc.) did make
money, but the industry did not.  Price increases must have played a role
in allowing the industry just to stand still.  I am not in the
pharmaceutical business and, like most people, choke when I see the cost
of some drugs, but it is certain that there are costs that often get
overlooked, and cost of capital (which is largely neglected in the
not-for-profit world) is one of them.

What is troubling to me about many of my fellow publishers is the
audacious lifting of prices when neither costs nor product enhancements
seem to warrant it.

Joe Esposito