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Sci Tech    H2'ed 9/13/14  

How Pharmaceutical Products Differ From Tennis Balls

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Stephen Unger
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In addition to the fact that it is too big to swallow, there are a number of critical ways in which a tennis ball, viewed as a commercial product, is very different from any medication that one might buy in a drugstore. The differences are very important, and illuminate the pressing need to treat the manufacture and sale of pharmaceutical products very differently. Let's start by outlining what it takes to succeed as a tennis ball manufacturer.

The Tennis Ball as a Commercial Product

By far, the largest number of tennis balls are purchased by those who play the most, and are therefore the people most able to evaluate the quality of a ball. You don't have to be a tennis champion to notice that the X-brand tennis balls that you just played with for the first time didn't seem as lively as the Y-brand that you had been using previously. Or that, even if they were OK right out of the can, that they wore out much sooner. It is also, of course, immediately obvious if the price of ball X is higher than the price of ball Y.

There may be tradeoffs between price and quality. For various reasons, some players might sometimes be willing to accept lower quality balls (perhaps for use only in practicing serves) at a sufficiently lower price. Or be willing to pay a premium for balls that last longer.

Since it is not all that costly to go into the business of manufacturing tennis balls, there are a number of competing brands. Assuming no collusion, this ensures reasonable pricing. The result is a market with knowledgeable buyers able to choose freely among competing products. Under these circumstances, a tennis ball manufacturer has a real incentive to produce a good quality product that can be profitably sold at a minimal price. The seller is motivated by self interest to do what is also good for the buyer. (Note that this discussion concerns relations between buyers and sellers. Relations between sellers and their employees are not nearly as compatible [1], and will not be discussed here.) How does this compare with the pharmaceutical industry?

What affects the profitability of a pharmaceutical product?

Tennis balls are easily evaluated by consumers. This is seldom the case with medications. An exception would be where the purpose of the medication is to alleviate immediate pain or discomfort. Perhaps more important, even physicians are very often unable to determine with any degree of confidence whether or not a particular medication will do the job for a given patient. In many cases nobody can make such a determination, because adequate studies have not been made.

Unlike a tennis ball, a pharmaceutical product can do real harm. There are often open questions as to whether there exist harmful side effects of a medication, particularly after long term use, or use in combination with certain other medications. Note that it is seldom obvious what long term effects might be.

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I am an engineer. My degrees are in electrical engineering and my work has been in the digital systems area, mainly digital logic, but also computer organization, software and theory. I am a Professor, Emeritus, Computer Science and Electrical (more...)
 

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