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Explain to your classmate the impact on consumers if patents on drugs developed by pharmaceutical companies were shortened in length (to less than 20 years).

Some barriers to entry exist because of government intervention. Often, companies lobby the government to erect new barriers to entry. This is possibly done to protect the integrity of the industry and prevent new entrants from introducing inferior products into the market. Generally, firms favor barriers to entry to limit competition and claim a larger market share when they are already comfortably making up the majority in an industry. An example that comes to mind of this concept is TurboTax, their parent company Intuit, and your annual taxes. For decades, many policy makers have been pushing towards the possibility of easier ways to pay taxes, but Intuit actively lobbies against these changes to keep a large portion of the tax-preparation market. Years ago, the Obama administration proposed a system of automatic tax filing, in which the IRS uses income information it already has to fill out your tax return for you. That would save millions of Americans considerable time and energy every year, but the idea has gone nowhere. There was an alternative idea developed for the IRS to create a free tax filing software, but that has been curbed with the Taxpayer First Act (Taxpayer First Act, n.d.). Instead of automatic filing, the tax prep industry has touted the Free Filing Alliance, a program through which companies like Intuit (which owns TurboTax) and H&R Block offer free software to low-income taxpayers (Matthews, 2019).

Economies of scale are a large barrier to entry for smaller pharma companies. It may initially be difficult for a new company to attempt to produce the same drug as a larger, established drug firm. Larger, established companies have the benefit of large infrastructure and distribution networks, as well as name brand recognition working in their favor. The industry also faces normal manufacturing barriers including high startup costs, time to build and maintain functioning capital equipment, and uncertain legal liabilities. Research and Development (R&D) costs also add up and can be pricey for smaller firms with less capital. Not only is the R&D expensive (clinical trials cost billions of dollars typically), but they are time intensive. For there to be enough research collected on the benefits of new drugs, they must dedicate years of research and trial testing. Patents are also often taken out by huge companies to fight off competitors, even if they do not plan on completing trials for the drug and moving forward with production.

Personally, I do not believe the patents should be extended post-FDA approval. I am someone who needs medications everyday for various medical conditions. Two of my medications are name-brand because they are still covered under patent protections. I am fortunate enough to be able to benefit from manufacturer coupons to alleviate some of the financial burdens placed on me with these medication needs, but if I were able to turn even just one of those medications into a generic version, I would save a huge amount of money each year. This is especially important when you add in the additional costs of healthcare like all the doctors' visit costs - and that's even with insurance.