Issues in Pharmaceutical Antitrust: Proposed Executive & Legislative Action for Improving Market Efficiency in the Pharmaceutical Sector

Abstract

The United States experienced a vibrant economy during the 20th century. The economy expanded business growth to unprecedented proportions. These unfounded growths gave businesses strong market influence, which effectively turned them into trusts. These trusts exclusively controlled necessary commodities such as oil, gas, and the railroad. With time, their unhinged control in the market caused unfavorable practices such as price fixing and market sharing which detrimented the general public. Action was called to Congress to combat the abuse, and it responded by enacting antitrust laws to curb monopoly growth in the United States. The antitrust laws were effective in combating abusive practices from multiple trusts but did not rectify the abuses conducted from unilateral business conduct. If a sole business introduces a successful product to the market, a natural demand is created. Alongside the product's success in the market, the business also enjoys patent privileges. This practice, however theoretically sound, created equity issues in the pharmaceutical sector. Drug manufacturers today engage in similar behavior as their trust counterparts during the 20th century. Congress attempted to rectify pharmaceutical abuses by enacting the Hatch-Waxman Act in 1984. The act sought to benefit generic manufacturers by increasing the rate which they obtain a brand-name drug and release it to the market. The Act was effective but left many loopholes for both manufacturers and generics to pursue and exploit the system. Drug prices still remain exorbitantly high, and generic versions of the brand-name drugs are not reaching the market at the desired pace Hatch-Waxman sought to legislate. Brand-names drug manufacturers found alternative ways to keep generic companies from releasing their drugs, such as claiming issues during the REMS phase, product-hopping, and reverse patent payment settlements. The Supreme Court of the United States has issued legal decisions to try to curb pharmaceutical abusive practices, and the Federal Trade Commission has attempted to do the same by initiating litigation against brand-name and generic drug manufacturers. These decisions and litigation cases unfortunately had minor effects on the market. This article seeks to introduce both short and long-term solutions to promoting an improved market efficiency in the pharmaceutical sector through executive, judicial, and legislative action. The objective of this solution is to ensure that interests towards free-market capitalism and social equity are both equally served to ensure an optimal efficiency that would benefit both the manufacturer and consumer.