Report on Abuse of Market Power

Added on - 15 Apr 2020

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Running Head: Abuse of Market PowerThe High Price of Essential Drugs in Canada and its Impact on HealthStudent NameInstitutional AffiliationCourse/NumberInstructor NameDue Date
Abuse of Market Power2The High Price of Essential Drugs in Canada and its Impact on HealthExecutive SummaryThe article ‘Terence Corcoran: If you like Canada's liquor, transit and electricitymonopolies, you'll love the medicine cartel’ by Corcoran (2017) tells us that the price ofessential drugs is very high and that drugs suppliers have market powers of which they havebeen noted to abuse. The article also notes that completion in this market is lower and if it wasincreased, the problem will be narrowed. The article finally suggest the importance ofgovernment intervention in this market to help in lowering prices for essential drugs. Thesecond article ‘The serious flaw in Canada's healthcare system: prescription drugs aren't free’ byKassam (2017) tells us of the importance of medical care in Canada and the lack of universalcoverage in the Canadian medical care. The article noted that some people take pills every dayor after days or even a week and are greatly constrained by the high drug costs. Some peopleskip doctors’ prescriptions to avoid high costs.AnalysisThe prices of essential drugs in Canada is very high. This is resulting in a reduction in theliving standards for most people especially those that are in the low income bracket. Given thatdrugs are important in restoring the health status of the sick people of which is untimely andunavoidable, drugs can therefore be considered to be a necessity. Thus, patients are forced topurchase the drugs at the prices offered in the market. The price elasticity of demand for drugsis inelastic and thus demand is not affected by the price changes. There are many hospitals inCanada both public and private; in addition, there are many pharmaceuticals selling drugs in allparts of the country. The players in the drugs market are not in a competitive market given thefact that there is patents for drugs that prevents entrance in this market. Some drugs providersoperates in monopoly and oligopolistic markets. This clearly means that drug prices are notgiven as an interaction of demand and supply forces as is the case for competitive markets.Rather, the prices are set by the players who possess market powers over the same.Many people die every year in Canada from lack of proper health services because theyhave become expensive and unaffordable for many. The players are in constant abuse ofmarket power and are hiking their prices. These players have various arguments to justify their
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