The US Pharmaceutical Industry - Essay Example

Ideally, regulation should be minimized because the industry is heavily reliant on the free market to thrive. This is particularly prominent in the issue of research and development. According to Agrawal (1999), regulation is one of the most common factors that affect R & D investment decisions of firms (p.17). The performance and innovation that result is directly attributed to this variable. Once policymakers start controlling prices, The highly competitive position of US pharmaceutical firms illustrates this point.

On the other hand, government involvement is also necessary on several grounds. First, regulation is needed to ensure rigorous quality restrictions. Secondly, public funding for research is essential in developing and discovering new medicines and technologies. Considering the current highly competitive state of the US pharmaceutical industry, I can say that it is ideal, primarily because it enables the industry to maintain positive performance. The discovery of new ways to treat illnesses is not merely an issue of profit but also of a public good as well.

There are also restrictions in place, which allows the government to help ensure fair and best practices as well as high standards. But the government should do its best in order to make sure that the industry’s capability to develop new technologies and drugs is not hampered. For instance, India has existing incentive frameworks and programs to promote investment and encourage its pharmaceutical firms to invest more in R and D (Itkar, 2008, p.20.3).. Considering the current highly competitive state of the US pharmaceutical industry, I can say that it is ideal, primarily because it enables the industry to maintain positive performance.

The discovery of new ways to treat illnesses is not merely an issue of profit but also of public good as well. There are also restrictions in place, which allows the government to help ensure fair and best practices as well as high standards. But the government should do its best in order to make sure that the industry’s capability to develop new technologies and drugs is not hampered. For instance, India has existing incentive frameworks and programs to promote investment and encourage its pharmaceutical firms to invest more in R and D (Itkar, 2008, p.20.3).

I would not like to propose any other model such as a modified mix of regulation and competitive framework. This is because the industry, as it is now, is operating efficiently with its high level of competition. Say, if I argue in pursuing price control, the industry will suffer in many respects such as in the area of research and development. It is extremely counterproductive. In a study by Arbex (2009), it was found that the average cost of a new drug development is approximately $800 million and that the rate of return of a new drug is unpredictable, citing reports that only three out of ten new drugs generate sufficient revenues to cover the cost of its development (p.39). This is underscored by the fact that pharmaceutical companies operates in a globalized world and in a liberalized economy.

In order to be globally competitive, hence, it must never be restricted. What I would want is for the policy network to be stringent on structural aspects such as best practices, ethical, laboratory, clinical