Question

In the United States patents are the primary tool to encourage the private sector to develop new drugs. Discuss the following issues. (1) What are the proncipal advantages and disadvantages of relying on the patent system to rpovide incentive to develop new drugs? (2) What are the strengths and weaknesses of using price controls on patented drugs to eliminate some of the most egregarious price increases made by firms with patents?

Answer 1

1. The principal advantages of relying on patent system in developing new drugs is that the patents provide required protection for the invention and ensure that the inventors get the economic advantage based on the invention. This would motivate the inventors to make new inventions related to drugs. Others would be prevented from copying or manufacturing the new drugs without the permission of the inventor. The owner can also license the patent to others for a certain period and make profit. As drugs are necessary for the human beings to exist, there would be high demand and the inventions should be given protection using patent system.

The disadvantages includes that the healthcare organizations may require to pay heavily to avail the services and the cost may hinder the organizations from using the drug. Another disadvantage is the time required to get the patents and new inventions may overtake the current one before they complete the lengthy process of availing patent. Another disadvantage is that the newly invented drugs need to undergo a lot of tests before the FDA authorize them to use in human beings and by that time more than half of the patent period would be over. The patent protection period for drugs is 20 years and most of the drugs avail protection only for less than ten years once they enter the market.

2. The strengths of using price controls on patented drugs includes that the strategy would help to make the medicine available for people who are in need of the medicine as more suppliers would be ready to supply the drugs if the price is unde control. Another strength is fair pricing as it would help to prevent the organizations from setting high price which is not reasonable at all. Other strengths are affordability and increased customer satisfaction as the move would ensure the presence of drugs in the market at affordable prices and this would help to increase customer satisfaction.

The weakness is that the pricing may be unethical sometimes as some of the drugs are invented after years of hard work and heavy expenditure. The ingredients also can be costly. The owners or the manufacturers may not be adequately compensated through price control. The inventors also may get de-motivated through price control in such cases. The manufacturer will not be ready to manufacture the medicine if they do not receive the expected profit.