Reference no: EM132498097

Short Story: People in America often wonder why we pay higher prices for pharmaceutical drugs versus countries that have socialized medicine like Canada, Great Britain, and Sweden. Here is the dirty little secret. These socialist governments often threaten U.S. pharma firms that they will steal the patents or outright reverse engineer the drug to figure out the formula. Then they will get the drugs fast and cheap while the U.S. pharma firms get stuck with the total cost of the billions they spent on research and development on these life-saving medicines. This is dirty.

These socialist governments then negotiate a deal with the U.S. pharma companies to get the drugs shipped to them at a cheaper price and Americans end up paying higher costs. In a sense, American capitalism is supporting government-run healthcare in these socialist nations.

Of course, U.S. pharma firms are not innocent angels either. They do their best to maintain the monopoly on their drugs for a full 20 years before they will allow the production of generic drugs by all pharma firms.

Many of the new drugs that have been invented over the last 30 years was because of the hard work of the U.S. government-funded National Institute of Health and the bright professors and students in our leading universities such as UC Irvine Medical Center, UC of San Francisco, etc... All of this activity is actually funded by the U.S. taxpayer.

Finally, because of the endless bureaucratic red tape and expensive testing rigor demanded by the U.S. Food & Drug Administration, the average cost to produce a new drug is about $2.2 billion.

Question: What a mess! What ideas do you have for this Oligopoly market structure to get U.S. pharma drug prices lower for the average American?