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Assignment: In the following articles the authors write about the reasons why pharmaceutical companies charge so...

Assignment:

In the following articles the authors write about the reasons why pharmaceutical companies charge so much and why monopolies can be so dangerous.

https://www.medicinenet.com/script/main/art.asp?articlekey=18892

https://www.cbsnews.com/news/whats-so-bad-about-monopoly-power/


1) Do you think that the large profits reaped by firms in the U.S. pharmaceutical industry provide the industry with sufficient incentives to innovate? Explain.

2) What type of action should the government take to soften the impact of monopolies.

Homework Answers

Answer #1

Decent amount of profits are necessary to make pharmaceutical firms innovate. Without prospective earnings, nobody motivates to do innovative in a particular industry. Innovative products are the technological advances which make the life healthier. Pharmaceutical firms are capable of developing new drugs that can persist life and help in curing diseases that affect individuals worldwide. Apart from large profits pharmaceutical firms like to have potential patent profits. Patents are actually important for pharmaceutical firms because they are the source of guaranteed profits and make their time of making the new drug worthwhile. It is like an economic catalyst for pharmaceutical firms. It motivates firms to keep continuing their research of making new drugs.

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