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Why do monopolies benefit the pharmaceutical industry
Competition in the pharmaceutical market
Business aspects of the pharmaceutical industry
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Why do consumers purchase specific drugs for various ailments, sicknesses or diseases they might have? Why do physicians prescribe certain drugs over competitive drugs that may be available to the public? Why is it that most of us can easily name specific drugs that fit the many ailments of today’s society? On the surface the answer might be as simple as good TV advertising or radio commercials or even internet adds. The truth of matter is the major pharmaceutical manufacturers own the patents on these drugs and this gives them all of the marketing budget and muscle they need to promote the drug and control the pricing. The incentives for larger pharmaceutical companies are very enticing and as a result, they don’t mind spending the time in clinical trials and patent courts to get their drugs approved. Some will even get patents on the process by which the drug is manufactured, ensuring that no competitor can steal the drug or the process. This protects their large financial investment and nearly guarantees a large return for their investors. Many consumer rights groups claim this is nothing more than legalizing monopolies for the biggest manufacturers.
A monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. A monopoly sells a good for which there is no close substitute. The absence of substitutes makes the demand for the good relatively inelastic thereby enabling monopolies to extract positive profits. It is this monopolizing of drug and process patents that has consumer advocates up in arms. The granting of exclusive rights to pharmacuetical companies over clinical a...
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Works Cited
Friedman, Milton. 2002. Capitalism and Freedom. Pages 127-128.
Lehman, Bruce. 2003. “The Pharmaceutical Industry and the Patent System”. International Intellectual Property Institute. Pages 1-14.
Yu, Winnie and Joel Hay. 1999. “Drug Patents and Prices: Can we Achieve Better Outcomes?” Measuring the Prices of Medical Treatments. Pages 27-28.
Food and Drug Administration. 2004. “Savings from Generic Drugs Purchased at Retail Pharmacies”, http://web.archive.org/web/20080223131005/http://www.fda.gov/cder/consumerinfo/savingsfromgenericdrugs.htm.
Meurer, Michael. “Pharmacogenomics, Genetic Tests, and Patent-Based Incentives”, Boston University School of Law. Pages 1-8.
Grabowski, Henry and John Vernon. 1986. “Longer Patents For Lower Imitation Barriers: The 1984 Drug Act”, The American Economic Review. Pages 196-198.
(7) Hall B. Patents and Patent Policy -. 2007. The 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the Morse H. SETTLEMENT OF INTELLECTUAL PROPERTY DISPUTES IN THE PHARMACEUTICAL AND MEDICAL DEVICE INDUSTRIES: ANTITRUST RULES. Allison JR, Lemley MA, Moore KA, Trunkey RD. Valuable patents. Geol.
In Melody Peterson’s “Our Daily Meds” , the history of marketing and advertising in the pharmaceutical industry is explored. The first chapter of the book, entitled “Creating disease”, focuses on how major pharmaceutical companies successfully create new ailments that members of the public believe exist. According to Peterson, the success that these drug manufacturers have experienced can be attributed to the malleability of disease, the use of influencial people to promote new drugs, the marketing behind pills, and the use of media outlets.
There seems to be no law protecting patients from the price increases that these big pharmaceutical companies are making. Marcia Angell, is an American physician, author, and the first woman to serve as editor-in-chief of the New England Journal of Medicine. In chapter 10 of her book, The Truth About the Drug Companies, she talks about stretching out the idea on monopoly. Patents makes it illegal for a specific set amount of time for competitors to sell the same/similar drugs. Once the patent is over, when the company loses its rights to a drug, the Food and Drug Administration (FDA) arranges for the generic version of the drugs made by a different company to go out on the market. When there is only one generic brand on the market, the cost may not be as cheap because the generic brand and the brand name shadow prices. This keeps the generic version just beneath the price of the brand name. Although the generic is not that much cheaper than the brand name, in the course of one year, the brand name company will lose hundred of millions of dollars due to generic drugs. From an economic point of view,
In some instances, the pharmaceutical industry in the United States misleads both the public and medical professionals by participating in acts of both deceptive marketing practices and bribery, and therefore does not act within the best interests of the consumers. In America today, many people are in need of medical help. In fact,the Federal Trade Commission estimates that 75% of the population complain of physical problems (Federal Trade Commission 9). They complain, for example, of fatigue, colds, headaches, and countless other "ailments." When these symptoms strike, 65% purchase over-the-counter, or OTC, drugs.
“Pure Food and Drug Act 1906.” 34 U.S. Stats. 768, quoted in Medicine in the Americas, Bethesda, Maryland: National Library of Medicine, 2004. http://www.ncbi.nlm.nih.gov/books/NBK22116/.
Why are the prices so high? Some critics of the drug companies argue that the larger firms are ripping off the American public, are dishonest and, in some cases, unsafe. On the other hand, there are health care workers such as doctors and their supporters who claim that research and testing for drugs costs money. This supposedly justifies their prices for their products. Also, as an argument to their side, they say that their practice is a benefit to the improvement to mankind. It is a life saving business, but are these prices justified? As one can see, this is a very important issue in medicine today. It affects everyone involved with medicine, which is much of the American public. It also affects the physicians and drug makers.
Although monopolies appear damaging at times, there are arguments that they are an advantage to society. Monopolies in the pharmaceutical industry drive companies to pursue research and development (R&D) efforts to gain new patents. According to a 1992 study, among the 24 US. Industry groups, pharmaceuticals dedicated 16.6% of their amounts to basic research, while all other industries averaged at 5.3% (Sherer 1307). This fact validates the incentive pharmaceutical companies have to get a patent and acquire more power. Pfizer encourages R&D because of the incentives and a want to obtain patents to receive more profit. Pfizer has to promote itself to be successful, creating a good brand image that consumers will trust. If the company can advertise successfully, more consumers will purc...
In recent years’ health reform has been a driving force in the United States political system. If you watch the news, you will understand how citizens, the government, or the economy are or might be affected by some sort of change in medical regulation. One of these hot topic issues is the cost of prescription drugs. Every major drug market besides the United States regulates the price of drugs in some way (Abbott and Vernon). By the United States not doing so, many believe it opens consumers up to being exploited by large pharmaceutical companies.
This Dissertation, titled “Impact of TRIPS on Indian patent regime with reference to pharmaceutical sector” has been written and based on doctrinal method of research which involves the collection of data from secondary sources, like books written by authors and articles found in journals and websites. No empirical research methodology is employed in this work. Library sources and Internet has provided with a major contribution of most relevant and latest information on the web, which helped to explore the subject through various dimensions. NALSAR University of Law, Hyderabad and library’s e- resources like Westlaw, Hein online have played a crucial role for the researcher to bring out materials for dissertation. Throughout this paper researcher has followed a uniform mode of citation.
One thing is guaranteed to happen; people will always get sick. Diseases and bacteria are always changing and the human body’s immune system isn’t always prepared to fight it off. The pharmaceutical industry knows this, and that’s why they are a multi-billion dollar industry. Today, you will see a pill that will virtually cure every kind of “disease” out there whether it’s physical, emotional, or neurological. What is a “disease”? Supposedly if you have constant headaches, you have a disease. If you’re overweight, you have a disease. If you have trouble concentrating, you have a disease. Any little problem that you can think of, there most likely will be a pill out there that will “cure” that problem. First, your body is the only thing that can cure a disease. Second, everyone experiences these little problems and there are simple solutions that can “cure” these problems without the expensive pills that can cause harmful side effects. Why isn’t this information being told to us? Because of money. Notice that in all commercial breaks there is a commercial advertising some kind of pill for a certain kind of problem. They make so much money that the drug companies can employ thousands of lobbyists to bribe, lie, and payout almost anyone they need to to get them to advertise their product. Even politicians benefit from the pharmaceutical companies, and if politicians have their back, then how can they be expected to be stopped? Modern medicine has no doubt done wonders for many people to get better from illnesses, but this industry is getting way out of hand.
According to Express Script’s Prescription Price Index, just last year, the prices of brand-name drugs have increased by an average of 16.2%. The pharmaceutical companies are able to do this because of two main reasons: 1) they spend more money lobbying than any other industry, 2) The Food and Drug Administration’s patent approval processes. In 2015, the Pharmaceutical Research and Manufacturers of America, the primary pharmaceutical lobbying organization, spent more than $230 million on lobbying politicians. This creates an obstacle for change as politicians influenced by these large drug companies vote for legislation that favor them. For example, the pharmaceutical industry has spent $70 million already this year, trying to fight a California initiative that would give states the right to negotiate prices, as well as get legal binding discounts on drugs that are patent protected (Time).
product differntiation :- This is the most distinct feature of monopolistic competation. In this market, all the producers are selling similar, but not the same products. The Shampoo are available under different brand name, colours, size, smell. Packing etc. For eg, clinic plus, Dove, Head & shoulders, Sunnsilk, L’Oreal etc. Product differentiation gives rise to an element of monopoly to each producer under monopolistic competation. Thus according to Chamberlin,monopolistic competation. is a blend of monopoly and perfect competition.for eg, I like only Dove because of its special colour, smell or its name. Any other shampoo cannot substitute Dove for me. It is clear that products in monopolistic competation, are not same as in Perfect Competition, neither are they are remote substitutes as monopoly. Real qualitative differences between the products may not be very strong in this market, but imaginary differences through packing, brand name, colour, are more strong in this
A monopoly is “a single firm in control of both industry output and price” (Review of Market Structure, n.d.). It has a high entry and exit barrier and a perceived heterogeneous product. The firm is the sole provider of the product, substitutes for the product are limited, and high barriers are used to dissuade competitors and leads to a single firm being able to ...
Other companies cannot replicate the drug and therefore they are forced to either wait until the patent expires or they must find an alternative drug that carries out the same purpose.... ... middle of paper ... ... It is clear to see that there are many pros and cons to patents in the pharmaceutical industry.
This week’s case study concerning Genzyme’s strategic direction was very interesting in that they essentially pursued a strategy that seemingly was purposely avoided by other players in the pharmaceutical industry (Schilling, N.D.). Their strategy centered on developing prescriptions for rare diseases. Typically “developing a drug takes 10 to 14 years and costs an average of $800 million to perform the research, run the clinical trials, get FDA approval, and bring a drug to market,” and in turn it is normally intuitive, from an economic standpoint, to attempt to develop drugs that will have a substantial market so to be able to assure enough revenue is generated to produce a significant profit. In turn, drugs marketed towards treating