They can walk away, but the government can levy additional tax if they do.

But realistically, from a moral point of view, they can't really walk away in the first place unless the government demands are ridiculously unreasonable (e.g. demanding a price lower than production). The only drugs subject to negotiation are those without generic alternatives (i.e. where a free market doesn't really exist), so stopping supply would quite literally kill people. This gives drug companies an enormous advantage in negotiations in the first place, so this kind of compensates for that.

We are talking about prescription drugs here right? This isn't about something people want it's about something doctors are prescribing individuals for their health or survival. Regular supply and demand should not apply here. If it does this is an indication of another pharma industry issue -- creating consumer demand for drugs through advertising.

Using goodRX has really opened my eyes to the shady practices of drug pricing. The same drug with or without insurance at different pharmacies can range in price by 80+% (often with the higher rate "discounted" for insurance). The drug companies are willing to be this flexible with the prices when dealing with retailers. In the case of a Wal-Mart or Costco the negotiations don't sound so different. So what's the difference with what's happening with the government? It's on public record not in a private corporate meeting room. The business side of Healthcare in this country follows protection racket economics and it doesn't look like this is going to change any time soon.

I never argued otherwise. I was simply pointing out that unless drug companies are actually being forced to priced the drugs (which I don’t think they are), they always have the option to direct more of their sales to a higher bidder.

Seen a different way, we pay for goods with two currencies: money and time. If the dollar price is artificially low, the time to acquire the good increases to compensate.