by Wayne Winegarden
Pacific Research Institute
June 13, 2014
Critics of patent laws claim that the decline in price observed after a drug comes off-patent is evidence of price gouging. This is false! Sharp price declines for pharmaceutical drugs following patent expiration are an indication that the pharmaceutical market is efficiently balancing two important, but often conflicting, goals. The first is encouraging a competitive market that includes generic competitors. The second is to help as many patients as possible in the future, and that requires rewarding companies for the expense imposed on them by research and development. The current U.S. patent system, while in need of improvements, strikes a reasonable balance between these two important goals.

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