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1. Explain the purpose and functioning of a PBM company. What are the antitrust concerns about a drug manufacturer purchasing a PBM company?
1. Explain the purpose and functioning of a PBM company. What are the antitrust concerns about a drug manufacturer purchasing a PBM company? What is the efficiency justification for such an acquisition?
2. The main economic rationale for a patent system is that quick imitation and commercialization reduces the expected profits of drug companies which thereby diminishes innovative activities. Given market realities, do you think a patent system is truly necessary? Can you think of other alternatives to a patent that might maintain innovation but preserve competition?
3. How would you describe the current market structure of the pharmaceutical industry? Do you think that the typical drug firm possesses any market power based on market structure? Why or why not?
4. This chapter argues that the FDA faces an incentive to delay the approval of new drugs, whereas pharmaceutical firms face an incentive to accelerate the introduction of new drugs. Explain some market realities that may force pharmaceutical firms to introduce new drugs at a more efficient pace.
5. What general conclusions have empirical studies reached concerning drug price competition?
6. One suggested remedy for high drug prices in the United States is the re-importation of lower-priced drugs from other countries. Do you think re-importation of drugs is a good idea? Why or why not? What are the costs and benefits of that practice?
