Market Failure In The Pharmaceutical Industry

Market Failures happen in many sectors of today’s economical world, but one that has been around and will always be around is the pharmaceutical industry. Today’s world is full of people who need something to survive day to day and to get better from an illness or disease. That something is medication made by pharmaceutical companies. Pharmaceutical companies are viewed as a monopolistic market. Monopolistic markets like that of the pharmaceutical companies tend to veer from the efficiency standard set in place for today’s big companies (). “Relative to pure competition, monopoly power elevates prices, increasing the monopolist’s profit at the expense of consumer welfare. Consumers lose more than monopolistic producers gain. Thus, total welfare …show more content…
When it comes to the drug industry patents are a big problem in the aspect that when a drug is patented the price can be set at whatever the company desires. This is unfair to the individuals without health insurance to cover such high fees. To regulate the patent system the drug companies themselves need to form a council to decide what is fair and how pricing should be set. Within the drug council the members should include healthcare professionals, health insurance professionals, and a representative from the drug companies. With that in force the patenting system would still be enforce but determining the price would go in front of a committee. Another problem is what the pharmaceutical companies spend their money on. When it comes to the finances the money is mostly spent on advertising and marketing, and when it is used for research the research goes into drugs that are highly profitable. This means that some drugs do not get the proper funding due to the lack of its profitability. To help regulate what these companies do with their finances it is necessary to set up a check and balances within the industry itself. Like stated before a council needs to be set up full of committee member who are hard wired to handle finances and understand what is needed in the world. With such a committee in force it would help allocate the finances to where it should be used. (research for important drug research). () Government regulation is not always a necessity when it comes to a monopoly. With proper committees set up within the industry to have their own checks and balances government intervention is