Kendra Bryant August 9, 2010 Professor Thompson Abstract The purpose of this paper is to analyze federal antitrust enforcers are investigating whether a multinational pharmaceutical company has attempted to minimize the impact of generic competition to one of its most profitable prescription drugs. This anti-depressant drug is the company’s best seller, with sales last year of $2. 11 billion, representing a 22% increase from the year before. I will review whether pharmaceutical companies have engaged in activities that will prevent generic brands to the prescription drug from entering the market.
Federal Trade commission is challenging a practice among brand-name and generic drug manufacturers to agree to delay the introduction of the lower priced generic drugs to the market. This paper will define antitrust laws and express the purpose to these laws. This paper will review reasons why would drug makers want to stymie generic competition. Next, I will discuss what types of legal barriers to market entry exists. Finally I will express some of the possible ethical dilemmas that can be presented in this example.
Let us begin with the hindering of generic competition. Antitrust laws are considered state and federal laws. This law applies to businesses and individuals. Antitrust laws were created to stop businesses that got too large from blocking competition and abusing their power (Multimedia course material, 2010). The antitrust law seeks to make businesses compete fairly. 1. It is possible that the multinational pharmaceutical company would want to stymie generic competition because of cost. It takes time, research and development to create a new product.
Pharmaceutical companies spend an average of $800 million to $1 billion and between eight and sixteen years to research a new drug (nationmultimedia. com). As far as generic brands being a competitor, I can see why pharmaceutical companies would want to hinder generic brands. Once the brand name is no longer patent the competition which is generic brands is free to recreate the drug and getting it approved by FDA to ensure that it is equivalent to brand name drugs. Generic brands are drugs that are manufactured and marketed without brands. Generic brands are much cheaper than brand name drugs for numerous of reasons.
Brand name pharmaceutical companies feel the need to charge ridiculous practices to make a profit for the product as well as the research and development for the product. Although drug makers are interested in making a profit to make up for research and development, it is negatively affecting those who need the drugs and are unable to afford it. Drug makers in the long run will be the one affected once the product is off-patent. When generic brands drugs enters the market it will force pharmaceutical companies to decrease the price for branded products. . Businesses face numerous of entry barriers that they must adapt to be successful. Entry barriers are the result of competitive behavior by existing businesses within the market place. In this case the legal barrier would be the pharmaceutical company trying to stop generic brands from entering the marketplace being that it would affect profits. There are four types of legal barriers to market entry exist research and development, patents and copyrights, costs, and government restrictions (AmosWeb. com, 2010).
Patent is the right to use, sell, or market an invention for a specified period. Government is the source of barriers to entry that created by patents and copyrights (AmosWeb. com, 2010). The government is the entity that establishes all laws on how things work within the market. Entering the market can be very costly. 3 . The possible ethical dilemmas in this case will probably be the delay of the introduction to generic brands to the market. It is possible that there are trade agreements which are illegal under the Sherman Antitrust Act.