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Comment by abhisheksingh01 | Hacker News Reader

I read somewhere that the amount of money that Pharma companies spend on research is the highest in healthcare but they get only about ~13% of the healthcare's revenue. There are other middle-man in healthcare that get a revenue share without putting in any work.

This is obviously not to say that Big Pharma cannot do better and there are no red flags.

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In the US as far as I recall the system is somewhat convoluted. Insurance companies buy their drugs through brokers who act as middle men to negotiate bulk prices with drug companies. No insurance company actually ever pays the sticker price on most drugs.

Yes, that's what I meant - Pharma companies earn money but not like people assume. These brokers earn a good amount. Maybe they had some purpose decades back but it is increasingly hard to justify their value now.

This is only revenue though, not profit. Do other orgs maybe get a higher share of revenue but also have higher cost because their business scales differently because it's labor intensive like hospitals?

Possibly. But I think, in general - Pharma companies are not very profitable because of the amount of research required to come out with a drug. And the success rate of research is not very high. On average, it takes over 4 billion dollars to get a drug out in the market. And not all drugs earn billion dollars in their life time

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