If it was developed in 1996, the patent protection would have expired by now. If the cost of production was "steady", then the question is why is a competitor not jumping in to make and sell something that would earn them a huge profit margin?
Do you doubt it was developed in 1996? Do you have evidence that the cost of production has significantly risen?
Otherwise, you seem to be repeating the old economics joke:
"The young economist looks down and sees a $20 bill on the street and says, “Hey, look a twenty-dollar bill!”
Without even looking, his older and wiser colleague replies, “Nonsense. If there had been a twenty-dollar lying on the street, someone would have already picked it up by now.”"
When there is a claim that there exists an arbitrage opportunity worth billions of dollars, I would consider it common sense to consider why has no one claimed the arbitrage opportunity yet.
The world has many very smart people spending many hours working very hard to find these opportunities, so the likelihood of it just sitting there like a $20 bill on the street, and not being picked up, seems quite small.
I do not know the answer myself, so I am interested in finding out. reddicky posted this:
>Biotech insulin is now the standard in the U.S., the authors say. Patents on the first synthetic insulin expired in 2014, but these newer forms are harder to copy, so the unpatented versions will go through a lengthy Food and Drug Administration approval process and cost more to make. When these insulins come on the market, they may cost just 20 to 40 percent less than the patented versions, Riggs and Greene write.
So it looks like there is some expensive expertise involved and investment into R&D that needs to be done.
Yes there is expertise and capital costs involved, which make it not an arbitrage play. It is more like a cartel, which seems to explain what is going on here, with the 3 insulin producing companies all fixing their prices together (at least in the US)
In theory there is 'nothing' stopping another company from coming along, even a group of Biohackers may try to do something - I wonder if that's been done... :)
The reason no one will pick it up is because there are massive capital investments to get something like that up and running, and the existing manufacturers can just drop their price to compete with you as soon as you get up and running. Now you have to recoup your capital costs in a saturated market, and your competitors can probably make insulin cheaper than you due to pre-existing economies of scale.
I would imagine that even other companies already in the pharma space would be interested. They don't want to play the race to the bottom game with billions of dollars in upfront costs. If anything, it's probably more profitable to make a new form of insulin that you get to patent. Which is how we end up where we are.
Although... I needed to buy a vial of the newest fast insulin in Spain last year without an insurance. One vial was 28 euros, which is much less than people in US have to pay.
The insulin in question is Lyumjev from Eli Lilly.
