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Date of Award


Document Type


Degree Name

Master of Arts (M.A.)


Graduate School

First Advisor

Charles Norman

First Committee Member

Monroe H. Hess, Jr.

Second Committee Member



Th focus of this thesis will be the alleged excessive market power or abuse of market power by firms in the drug industry. To this end, it will be necessary to discuss such aspects of the industry as prices and profits, patenting and licensing, innovation, promotion and generic versus brand name prescription. But since it is essential to limit the area of investigation, these considerations will be entered into only as they relate to the main focus of the study. The drug products under discussion will be “ethical” products. These are products requiring prescriptions written by a doctor, and without which the buyer cannot purchase the drug, as contrasted with proprietary medicines, such as aspirin, which can be brought over the counter.

The specific questions to which answers will be sought are as follows: (1) Assuming administered prices, found wherever pure competition does not prevail, are these prices socially evil?

In this connection, we are concerned not with whether there is or is not sufficient evidence of price-fixing arrangements for a convisiton, but whether the degree of market power is harmful to the economy. In other words, how much competition is socially and economically useful? How “pure” can we expect competition to be?

Are the prices in the drug industry too high in terms of unwarranted profits and the considerations of humanity related to the sale of medicines?

Here, we shall be concerned with possible solutions. If prices are too high, what specifically causes this situation? What changes could be made to put prices within reach of the ordinary consumer without damaging the profit position of companies? What bearing does the possibility of prescription by generic names have on this situation?

In the course of answering these questions, an attempt will be made to draw some definite conclusions on these highly controversial issues. Proposals and recommendations for further study will be presented.





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