Pogge's Numbers

From my understanding of the reading, it seems as if the full-pull plan will only really be successful if a.) profits either match or sit above those listed under the current regime and b.) if affluent taxpayers approve of taking on the burden between the marginal/subsidized cost of a drug and a pharmaceutical company's ideal profit-maximizing price level under a monopoly.

I was a bit skeptical of the numbers that Pogge used to justify his reasons for funding the plan, so I decided to run a few calculations myself.

Pogge estimates that the annual cost of the plan could be anywhere from $45-$90 billion. Given the high demand of potentially life-saving drugs in poor countries, individuals living in poverty would contribute to a significant increase in a pharmaceutical company's customer base under the full-pull plan. Let's assume that the plan would constitute a 20% increase in Pfizer's total customer base in 2014. Let us further assume that individuals within poor countries would only pay the cost of actually producing the drug (excluding R&D expenses). This 20% increase in the customers that Pfizer serves would increase annual production costs from 9.5B to 11.5B. Again, assuming that poor populations only paid production costs of the drug, revenues would rise from 49.6B to 51.6B.

Pfizer's gross profit (revenues - production expenses) is 40.0B. Pfizer must please its shareholders, so it is still going to expect the 80.7% gross profit margin that it would have received if it did not participate in the full-pull program. Therefore, Pfizer's expected gross profit after the hypothetical implementation of the full-pull plan would be 49.7B. The monetary "reward" that Pfizer receives for lowering GBP reduction would have to be at or above 9.7B. Pfizer currently makes up ~8.3% of the global pharmaceutical market. This means that it would have cost roughly 116.9B to implement the plan globally in 2014.

If the U.S. represents 30% of the global product, then the expected contribution would be 35.1B. The United States' total international affairs budget totaled 50.3B for FY 2016. Nevertheless, Pogge does go on to address the possibility of an affluent country's refusal to participate altogether and states that the tax burden will be minimal for individuals in remaining countries on page 35.

I personally thought that this reading was a very good introduction to PPE in general. Pogge's use of each discipline to strengthen his argument was interesting to see and I hope that this intersection will continue to appear in our future philosophy readings.