Big Macs and pricing

As an executive at a leading pharmaceutical firm in the 1980s, one of the great challenges was establishing a fair and transparent pricing system for lifesaving drugs marketed worldwide. Beyond our own strong sense of ethical pricing behavior, we were subject to strict price controls in many countries, oversight in congressional hearings, various patent regimes and threats, shareholder expectations, and media commentary, among many other considerations. At one point a worldwide “single price” subject only to fluctuations in currency exchange rates was the gold standard (for developing countries in Africa, free product through NGOs was a safety valve, and for, say, China and India, widespread ignoring of patents served the same though not lightly tolerated end).

Reading about the simple elegance of the Big Mac Index (Campus Notebook, Oct. 10) gave me hope that better approaches might be developed to deal with the perplexing problem of bringing first-rate technology at “objectively” fair prices to most of the peoples of the world, even within the flawed constraints of market capitalism. I say this, however, not to exclude more straightforward “non-market” (but public and private R&D-supportive) solutions, which many readers might suggest.