Pfizer’s main patent on this product expired in 2006. A good example of the problem is Pfizer’s cardiovascular product Norvasc. Without this litigation, patentees will be encouraged to exploit the patent system to delay generic entry, leading to additional expenditures of billions of dollars. First, it needs to reward generic firms that invest in litigation to eliminate invalid patents and thus clear the way for competition. A regulatory authority also needs to take care of two other problems. These approaches could make price related to cost. Some countries have also used tendering mechanisms to drive prices down. It should instead have started at perhaps 60% and fallen with every additional entrant. Ontario tried doing this, but only at the price levels of 70% (with one generic) and 63% (with two or more generics). Generics will then keep entering until the price is driven down to a level close to costs. One mechanism to achieve this is to decrease the reimbursable price automatically by 10% with every new generic entrant. We need a system that drives reimbursable prices down to the level of cost. Setting the reimbursable price at 50% or 25% of the brand price guarantees that even products that are very cheap to produce will be sold at the highest reimbursable price. Thus, wholesale prices don’t reflect the cost of manufacturing, which varies a lot between drugs. The higher the wholesale price, the larger the potential margin, and the larger the allowance. The profits aren’t left with the generic manufacturers, who, if they want to make the sale, have to pay allowances to the pharmacy as an inducement to carry their product (instead of another manufacturer’s). Since consumers don’t worry about price, pharmacies buy generic products with the highest reimbursable wholesale price, which governments are setting at a fraction of the brand price. Competition among generic drug producers is then supposed to lead to low prices. PLANTS VS ZOMBIES CRACK SERIAL KEYGEN FULL PLUSInsurers have attempted to limit this markup by reimbursing pharmacies only for the wholesale cost of the drugs dispensed, plus a fixed markup and a dispensing fee. While pharmacies appear competitive, they are able to mark up prices substantially because consumers with insurance are relatively insensitive to price. Generally, price regulation is applied because a firm has the ability to exercise market power. And the current process of price setting is unpredictable, unfair, opaque, and politicized. Changing this number frequently is even worse. Regulating the price based on a number that is not in any way related to cost is a strategy that is guaranteed to distort the market. And some are very cheap to produce, less than 5% of the brand price. Some drugs are relatively expensive to produce, and should be priced above 25% of the branded product. Prices in competitive markets - and generic drugs are very competitive - should be related to cost. This pricing strategy is hopelessly wrong. The only discernable rationale for these percentages is that they are round numbers. Over the past few years in Ontario, generic prices have faced a ceiling based on the price of the equivalent brand product: The ceiling started at 75%, and then was revised to 50%, and then unexpectedly revised again to 25%. Prices are set arbitrarily and change suddenly and substantially. Unfortunately, Canadian regulations around generic drug pricing seem to be based on exactly the opposite set of principles. There are some basic principles: Price should be related to cost the process of price setting should be fair, and preferably open and subject to appeal through an independent authority and the goals of the regulation should be explicit. Price regulation is an exceptionally powerful tool for controlling markets it is also dangerous and needs to be deployed judiciously.
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