I am sure that most of you know that the price of U.S. prescription drugs are ve

Question

I am sure that most of you know that the price of U.S. prescription drugs are very- high-highest in the world. Pharmaceutical drugs are protected by U.S. government issued patents-which eliminates free market competition for a number of years and allowing the patent holder not to be concerned by price competition in the market. The patent holder has a monopoly for their product-service. ""Please read the articles that have been inserted below and discuss the patent monopoly of prescription drugs"".

There are many issues involved with the price of pharmaceutical drugs - including insurance companies and third party payers. Consumers with health insurance base their demand for drugs -which is primarily inelastic demand-on the price they pay at the time of purchase. Demand is based on price.

http://www.tms.org/pubs/journals/JOM/matters/matters-0404.html

http://www.nytimes.com/roomfordebate/2015/09/23/should-the-government-impose-drug-price-controls

http://healthaffairs.org/blog/2015/10/29/how-government-policy-promotes-high-drug-prices

Explanation / Answer

The Pharmaceutical industry in the US, or in the rest of the world is based on reseatch and innovation. Patents provides an incentive to a firm to engage in research and innovation for a new drug. Basically, patents act as a reward for all the hard work that firms put in to make new drug. Patents are not provided with an intention to create monopoply powers , although the problem is created when firms hike up the prices.

I believe that banning the drug patents by the congress will not be a good idea, as this will curb research. All that can be done is that a law should be passes out for the Pharmaceutical companies to have a price ceiling. They should not be allowed to charge a price beyond a certail level. This will promote innovation and won't hurt the consumers also.

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