Developing a new pharmaceutical drug is expensive because:

Developing a new pharmaceutical drug is expensive because:
 A. Laboratory and testing work are expensive.    
 B.  Chemicals are expensive.    
 C.  Patents don’t last long enough.    
 D.  Most drugs have some side-effects.    


How can we reduce the total cost of pharmaceutical drugs?
 A.  Introduce generic drugs.    
B.  All of these    
 C.  Use drug formularies.    
 D.  Introduce co-payments.    


Why does a monopolistic firm charge more than a competitive firm?
 A.  To save costs.    
 B.  To make as many drugs as possible.    
 C.  Because it can.    
 D.  To maximize its revenue.    


Basic pharmaceutical research should be carried out by universities rather than drug companies because:
 A.  Universities can carry out the research without duplication.    
 B.  They have a stronger incentive to make profits.    
C.  They have a stronger incentive to produce better drugs    
 D.  They have better scientists.    


Generic entry is a problem for pharmaceutical companies because:
 A.  The generic companies don’t have to recover the costs of development.    
 B.  The generic drug companies can produce different drugs.    
 C.  Once the patent is finished the generic drug companies can increase their prices.    
 D.  The generic companies can produce the drugs cheaper.    


“Direct-to-consumer” advertising is becoming an important component of drug companies marketing strategies. Is this a good thing? Give me your informed opinion. Either answer will be marked as correct.
 A. No    
B. Yes    
Rationale:
The pharmaceutical industry is highly regulated, primarily for safety reasons, but also for competitiveness problems.


Why don’t drug companies do more research into using naturally occurring substances as pharmaceutical drugs?
 A.  Naturally occurring substances are never effective.    
 B.  It takes too long to get them to market.    
 C.  They are more expensive to test.    
 D.  They can’t patent naturally occurring substances.    


What is responsible for the rapid growth in pharmaceutical expenditures?
 A.  Drug company profits.    
B.  All of these    
 C.  The extended period it now takes to get a drug to market.    
 D.  The decreasing frequency of governments approving drugs.    


What problems arise with the pharmaceutical industry?
 A.  The industry is not competitive.    
 B.  It costs too much to develop new drugs.    
C.  Firms are too large.    
 D.  Firms can charge as much as they like for the drugs they produce.    

What is a patent?
 A.  The exclusive right to sell an innovation for a limited time. [/b]   
 B.  A law granting exclusive rights to a piece of property.    
 C.  A law protecting property owners.    
 D.  The exclusive right to sell a drug.