Large pharmaceutical firms use monopoly power granted by patents to sell drugs at prices that far exceed marginal costs. Evidence from countries without effective patent protections suggests that these drugs could sell for as little as 25 percent of their patent-protected price. That difference cost U.S. consumers (including the government) about $80 billion in the year 2000, nearly four times what pharmaceutical corporations spent on research that year.
How should we deal with these disturbing abuses of the patent system?
Should the government buy back patents as your textbook discusses, or should it not issue them in the first place?
Should patents be granted in some industries but not others?
If so, how should we encourage research in areas with no patent protection?