Thursday, February 28, 2013
Price Formula for Patented Drugs
The Department of Pharmaceutical in India has developed a formula that they would like to implement to control the prices of patented drugs. The formulaic pricing will help control the pricing of patented drugs and get rid of the discretion that the companies have about their drugs. Do you think that this is a good idea? Is a formulaic approach to drug pricing and eliminating the generic going to work? Should the government step in and help price drugs? Here is the article.
Subscribe to:
Post Comments (Atom)
We are in a globalization word where it is hard to track the prices and agree "at the right price". That is why I think the government should not waste time trying to figure out how to find the right price. As the article said, the project has taked 7 years to elaborate and it is still with big mistakes. So, I believe the government should ask what happens with India, why people cannot acquire medice, what is the India's background.
ReplyDeleteWhen I was reading the article, I fell in love with the following statement. "The authorities argue that price controls are necessary to ensure that expensive drugs are available at affordable rates to the poor". However, who decide what poor means. The experience shows us that the subsidies never achieve to help poor people. So, I do not agree with any government control. One should also keep in mind the agreement that the countries has signed in World Trade Organization to not have rataliation problems.
Priscila, very interesting points. I agree with what you said that it is not worth the governments time and expenses to step in and control the pricing variances. This is an interesting topic with no right answer it seems. I personally believe it is up to the companies who create the products.
ReplyDeletePrice controls on patented drugs is a very similar issue to patents themselves. Patents are meant to provide an incentive to innovate and help offset research and development costs. However, these patents also provide a monopoly to the patent holder, leading to inefficient pricing (higher than socially optimal). These proposed price controls would have the opposite effect of patents. They will decrease the incentive to innovate because the investment in creating a new drug will not produce the same amount of return as it did before the price control, and firms may cut back on innovation investment. That being said, even after the proposed price cuts it is likely that pharmaceutical companies still stand to see large profit margins, but then where do you draw the line? Price controls counter-act many of the intended effects of patent law.
ReplyDeleteIn addition, it is important to note that, according to Sakthivel Selvaraj, "even after the proposed price controls, the patented medicines are likely to remain out of reach for most of India's population." It doesn't seem beneficial to take this controversial action when it isn't going to produce the objective benefits.
There are definitely arguments for price controls on drugs as well as against price controls on drugs. On one hand allowing companies to charge high prices for drugs can lead to large profits which can then go into research and development for other important drugs. On the other hand, the price of medicine is very high as it is and for people without health care many times the "right" drugs are too expensive. I think a good option would be to implement some test price controls and see how the market responds and then go from there.
ReplyDeleteThe problem with the patents on these drugs is that they suddenly become unavailable to everyone and only available for those who can afford them. I think allowing some price control on these patented drugs would be a good idea, but I'm sure the companies that patented the drug would not approve because this will only lower their profits.
ReplyDeleteI can see both arguments. On one hand, controlling the price of these patented drugs can make them available to more poeple but will upset the distribution companies because it will lower their profits. Their is no right answer but i do not know if the government should have overall control of the price levels. I think they should have price control on the more important drugs that are more commonly needed.
ReplyDelete