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The Pharmaceutical Industry Has Been Asking the Government to Raise the Prices of Certain Drugs for a Long Time, but Has Not Received a Response. Why, According to the Author, Could this Be? - Legal Reasoning

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MCQ

Last week, the government used the Drug Price Control Order, 2013, to increase the price ceiling for 21 medicines by as much as 50% to ensure their availability in the market. This is a welcome move because lower prices would have further limited the availability of these drugs, some of which include those used for malaria, leprosy and allergy. The decision by the regulatory authority – usually known to reduce prices of essential drugs – was prompted by repeated petitions by the pharmaceutical industry, which pointed out that the increasing cost of imports had made the production of some of these drugs unviable. Prices of bulk drugs and active pharmaceutical ingredients have, in fact, gone up by up to 88%, and are largely imported. 

This raises a basic question: Should the government control prices? The motivation for controlling drug prices is not very difficult to understand. Unlike some of the developed countries, where most of the population has insurance coverage or medical facilities are provided by the state, medical expenses in India are borne by citizens, largely through out-of-pocket expenses. Therefore, the state intervenes by keeping prices of some drugs in check to contain such spending. However, the unintended consequence is that it affects the supply of drugs and can potentially make citizens worse off. The risk of non-availability was an important reason for raising prices. Although all pharmaceutical companies may not stop producing drugs with price control, they may limit the supply. Further, the government usually dithers on price hike because of political considerations so that it is not accused of favouring private companies.

Thus, the government should stay away from dictating prices and allow the market to function. Competition in the marketplace will ensure that no company is able to make extraordinary profits in basic and essential drugs. Since the state has limited resources, it should focus on regulation, and ensure that the quality of drugs supplied in the market is not compromised at any point. 

The pharmaceutical industry has been asking the government to raise the prices of certain drugs for a long time but has not received a response. Why, according to the author, could this be? 

Options

  • The government is indecisive about raising prices for the fear of being accused of favouring private companies.

  • Private companies only value profit, and do not pay attention to the quality of medicines they manufacture.

  • The government has limited resources, and may not have been able to study the details of the pharmaceutical industry’s demands.

  • Since deciding the prices of medicines is not the government’s job, it would wish to avoid doing so.

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Solution

The government is indecisive about raising prices for the fear of being accused of favouring private companies.

Explanation:

The correct answer is – the government is indecisive about raising prices for the fear of being accused of favouring private companies. The author states this towards the end of the second paragraph and says that this would be for political considerations. There is no information in the passage to support 'Private companies only value profit, and do not pay attention to the quality of medicines they manufacture. ' as the correct option. While the author says that the government has limited resources, and argues that it should not set prices for medicines, the author does not provide these as reasons for delays by the government in setting the prices of medicines. 

Concept: Legal Fundamentals and Terms (Entrance Exams)
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