Government Mandated Monopolies,


Government Mandated Monopolies

By Alla Gul (MBA) – Our Contributor

Why are drug companies such as Pfizer allowed to establish and maintain monopolies (patents) on drugs – form of barrier?

Conventional wisdom might suggest that generally monopoly is bad for consumers because of the absence of competition.
A) What type of barrier is this?
B) Do you agree that drug companies should have this government mandated monopoly?  Why?

In economics, a monopoly (from Greek monos / μονος (alone or single) + polein / πωλειν (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. (This is in contrast to a monopsony which relates to a single entity’s control over a market to purchase a good or service. And contrasted with oligopoly where a few entities have )[1][clarification needed] Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.[2] The verb “monopolize” refers to the process by which a firm gains persistently greater market share than what is expected under perfect competition.

A) Monopoly is the situation in which there is a single seller of a product for which there are no close substitutes (Mankiw, 2004, p.314). A monopoly remains the only seller in the market because other firms can not enter the market and compete with a seller. It might happen due to the following reasons (“Monopoly: A Brief Introduction”, n.d.). First, a single firm owns a key resource.

Second, the government gives a single firm the exclusive right to produce some goods or services. Finally, the costs of production make a single producer more efficient than a large number of producers. As a result, all of the above create barriers to entry causing monopolies to arise. “The fundamental cause of monopoly is barriers to entry” (Mankiw, 2004, p.314). Regardless that government mandated monopolies have had some negative effects on the economy, the government grants the monopoly because doing so is viewed to be in public interests.
When a pharmaceutical company discovers a new drug, it can apply to the government for a patent. If the government approves the patent, the company has an exclusive right to manufacture and sell the drug for 20 years. The drug can not be copied due to protection of a patent (“Monopoly: A Brief Introduction”, n.d.). Many drug companies have been allowed to establish and maintain monopolies (patents) on drugs. These government mandated monopolies have created obstacles for other pharmaceutical companies to enter the market and compete. For example, Pfizer has patents on many drugs including Quinapril, Atorvastatin, and Sildenafil. Until these patents expire, no other company is allowed to produce the same drugs. This gives a company strong monopoly power allowing them to set higher prices and lower level of production than under competition that is considered to be harmful to the economy. However, monopolists argue that granting patents is in the public interest because it would allow them to spend more money on research and development in order to develop new and improved products. “It has long been recognized that government-granted monopolies (i.e., patents, copyrights, trademarks and franchises) can benefit society as a whole by providing financial incentives to inventors, artists, composers, writers, entrepreneurs and others to innovate and produce creative works” (“Monopoly: A Brief  Introduction”, n.d.). In fact, the importance of establishing monopolies of limited duration for this purpose is even mentioned in the Article I, Section 8 of the U.S. Constitution which states that “The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” (“Monopoly: A Brief Introduction”, n.d). Thus, “The government grants the monopoly because doing so is viewed to be in public interests” because “granting patents for discovered drugs encourages research and development” (Mankiw, 2004, p.316).

To summarize, the laws governing patent have benefits and costs. “The benefits of the patent and copyright laws are the increased incentive for creative activity. These benefits are offset, to some extent, by the costs of monopoly pricing” (Mankiw, 2004, p.316).

B) There are intensive discussions on whether drug companies should have this government mandated monopoly. Supporters of such monopolies argue that even if patent laws do impose costs in the form of higher prices and lower availability for consumers, under patent laws, more innovation will occur, which is beneficial  for society as a whole (“Patent Laws and the War on Good Drugs”, 2001). On the other hand, oppositionists state that the law encourages drug monopolies to create artificial scarcity of some drugs in order to have a higher price for their products (Boldrin & Levine  , Chapter 4). Next argument states that the law deprives the poor from affordable drugs and blocks rights of developing nations under TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights).

Despite the clear need for developing countries to exercise their rights to compulsory licensing and parallel imports to enable their people to have access to affordable medicines, a major and perhaps the most disturbing aspect of the crisis of patents and drugs is that obstacles have been and are being put in the way of developing countries seeking to make use of TRIPS provisions on compulsory licensing or parallel imports in order to buy or produce drugs at more affordable prices. (“Patents and monopoly prices”).

To continue, they argue that the high prices can not be justified by large expenses on Research and Development (R&D) since often most of the profits go to cover marketing expenses rather than R&D: “Pfizer says this pricing is necessary to fund new drug research, but 35 percent of its profits drain into marketing and only 15 percent support R&D, according to the Securities and Exchange Commission in 2002…”(“Gov’t should use power to make drugs affordable”). Oppositionists also state that due to the patent law, the pharmaceutical companies are getting less efficient.

In economics, a monopoly exists when a specific individual or an enterprise

In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service

… Another major problem with pharmaceuticals today: The pharmaceutical companies are getting less efficient. They are increasingly turning out drugs that are less important to public health because they’re not as profitable. For example, roughly 70% of new FDA approved drugs are copycats or “me too” drugs which are small variations on existing drugs, usually done to reduce R&D costs and extend the patent life of an existing drug. (“Prescription Drugs”).

Finally, oppositionists conclude that “Patent protection is the most effective tool for drug manufacturers to keep out competition from generic producers and thus maintain monopoly control over the production, marketing and pricing of medicines” (“Patents and monopoly prices: Third Word Network” ). They state that “The net loss to society – from this policy is real and enormous” (Boldrin & Levine  Against Intellectual Monopoly, Chapter 4)

I incline to support those opposing the law. However, I also understand that the protection of intellectual property rights is important, and its violation “not only harms those innovators, such as the drug companies, who would be directly affected, it also does great damage to innovative activity, and indeed all types of capital (“Patent Laws and the War on Good Drugs”, 2001). I do not think I am ready to take one side or the other at this point since this is a complex issue and I do not want to jump to a conclusion ahead of time. I would like to investigate it more thoroughly.

References

Boldrin & Levine YEAR: Against Intellectual Monopoly, Chapter 4: The Evil of Intellectual

Monopoly Retrieved on October 21, 2007  from http://www.micheleboldrin.com/research/aim/anew04.pdf

Gov’t should use power to make drugs affordable

http://www.yaledailynews.com/articles/view/10127?badlink=1
October 17, 2007)

Mankiw,G.(2004). Principles of Economics. Mason, OH: Thomson South-Western

Monopoly: A Brief Introduction, Retrieved on October 20, 2007  from

http://www.linfo.org/monopoly.html

Morgan Rose , 2001, Patent Laws and the War on Good Drugs. Retrieved on October 21,            2007  from http://www.econlib.org/library/Columns/Teachers/patent.html.)

Novartis lawsuit threatens access to medicines for millions,  January 20 2007 Retrieved

on October 19, 2007  from http://www.oxfam.org.uk/applications/blogs/pressoffice/2007/01/novartis_lawsuit_threatens_acc.html)

Oxfam Press Release – 12 December 2006: India, Thailand and Philippines must face

down conflicts to guarantee affordable medicines Retrieved on October 21, 2007 from http://www.oxfam.org/en/news/pressreleases2006/pr061212_affordable_medicines6

Patents and monopoly prices: Third Word Network. Retreived on October 19, 2007 from http://www.twnside.org.sg/title/twr131b.htm

Pfizer, Novartis flayed for blocking new drugs to poor nations. Retreived on October 21,  2007  from http://www.dancewithshadows.com/pharma2/pfizer-novartis.asp

Prescription Drugs, April 2006. Retreived on October 20 from http://www.kucinichforcongress.com/issues/prescriptiondrugs.php April 2006

” Novartis lawsuit threatens access to medicines for millions”http://www.oxfam.org.uk/applications/blogs/pressoffice/2007/01/novartis_lawsuit_threatens_acc.html Jan 26 2007

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What is National Park? National Parks History. List of National Parks in USA


What are the National Parks?

IUCN, International Union for Conservation of Nature, helps the world find pragmatic solutions to our most pressing environment and development challenges.
In 1969 the IUCN (International Union for the Conservation of Nature and Natural Resources) declared a national park to be a relatively large area with particular defining characteristics.

A national park was deemed to be a place where:

  • one or several ecosystems are not materially altered by human exploitation and occupation, where plant and animal species, geomorphological sites and habitats are of special scientific, educative and recreative interest or which contain a natural landscape of great beauty.
  • the highest competent authority of the country has taken steps to prevent or eliminate as soon as possible exploitation or occupation in the whole area and to enforce effectively the respect of ecological, geomorphological or aesthetic features which have led to its establishment.
  • visitors are allowed to enter, under special conditions, for inspirational, educative, cultural and recreation purposes.

In 1971 these criteria were further expanded upon leading to more clear and defined benchmarks to evaluate a national park. These include:

  • a minimum size of 1,000 hectares within zones in which protection of nature takes precedence
  • statutory legal protection
  • a budget and staff sufficient to provide sufficient effective protection
  • prohibition of exploitation of natural resources (including the development of dams) qualified by such activities as sport, fishing, the need for management, facilities, etc.

Watch a preview of The National Parks: America’s Best Idea

View more film clips

Filmmaker Ken Burns and his longtime colleague Dayton Duncan take us on a behind the scenes tour of their new PBS series, The National Parks: America’s Best Idea. The team explains why they chose the parks as their subject, as well as describing their five-year journey through research, scripting, filming and editing the series. Their story is illustrated by rare footage of the film crew at work shooting in the parks, as well as excerpts from the finished film.

PBS Previews: The National Parks

Filmed over the course of more than six years at some of nature’s most spectacular locales — from Acadia to Yosemite, Yellowstone to the Grand Canyon, the Everglades of Florida to the Gates of the Arctic in Alaska — The National Parks: America’s Best Idea is nonetheless a story of people: people from every conceivable background — rich and poor; famous and unknown; soldiers and scientists; natives and newcomers; idealists, artists and entrepreneurs; people who were willing to devote themselves to saving some precious portion of the land they loved, and in doing so reminded their fellow citizens of the full meaning of democracy. It is a story full of struggle and conflict, high ideals and crass opportunism, stirring adventure and enduring inspiration – set against the most breathtaking backdrops imaginable.

 

 

National Parks History

In 1810, the English poet William Wordsworth described the Lake District as a "sort of national property in which every man has a right and interest who has an eye to perceive and a heart to enjoy". The painter George Catlin, in his travels through the American West, wrote in 1832 that the Native Americans in the United States might be preserved "by some great protecting policy of government . . . in a magnificent park . . . A nation’s park, containing man and beast, in all the wild and freshness of their nature’s beauty!" Similar ideas were expressed in other countries—in Sweden, for instance, the Finnish-born Baron Adolf Erik Nordenskiöld made such a proposition in 1880.

The Scottish-American naturalist John Muir was inspirational in the foundation of national parks, anticipating many ideas of conservationism, environmentalism, and the animal rights movement.

The first effort by any government to set aside such protected lands was in the United States, on April 20, 1832, when President Andrew Jackson signed legislation to set aside four sections of land around what is now Hot Springs, Arkansas to protect the natural, thermal springs and adjoining mountainsides for the future disposal of the US government. It was known as the Hot Springs Reservation. However no legal authority was established and federal control of the area was not clearly established until 1877.

The next effort by any government to set aside such protected lands was, again, in the United States, when President Abraham Lincoln signed an Act of Congress on June 30, 1864, ceding the Yosemite Valley and the Mariposa Grove of Giant Sequoias (later becoming the Yosemite National Park) to the state of :

The said State shall accept this grant upon the express conditions that the premises shall be held for public use, resort, and recreation; shall be inalienable for all time.

In 1872, Yellowstone National Park was established as arguably the world’s first truly national park. When news of the natural wonders of the Yellowstone were first promulgated, the land was part of a federally governed territory. Unlike Yosemite, there was no state government that could assume stewardship of the land, so the federal government took on direct responsibility for the park, a process formally completed in October 1, 1890—the official first National park of the United States. It took the combined effort and interest of conservationists, politicians and especially businesses—namely, the Northern Pacific Railroad, whose route through Montana would greatly benefit by the creation of this new tourist attraction—to ensure the passage of that landmark enabling legislation by the United States Congress to create Yellowstone National Park. Theodore Roosevelt, already an active campaigner and so influential as good stump speakers were highly necessary in the pre-telecommunications era, was highly influential in convincing fellow Republicans and big business to back the bill.

Yosemite Valley, Yosemite National Park, California, USA.

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The "dean of western writers", American Pulitzer prize-winning author Wallace Stegner, has written that national parks are ‘America’s best idea,’—a departure from the royal preserves that Old World sovereigns enjoyed for themselves—inherently democratic, open to all, "they reflect us at our best, not our worst." Even with the creation of Yellowstone, Yosemite, and nearly 37 other national parks and monuments, another 44 years passed before an agency was created in the United States to administer these units in a comprehensive way — the U.S.National Park Service (NPS). Businessman Stephen Mather and his journalist partner Robert Sterling Yard pushed hardest for the creation of the NPS, writing then-Secretary of the Interior Franklin Knight Lane about such a need and spearheading a large publicity campaign for their movement. Lane invited Mather to come to Washington, DC to work with him to draft and see passage of the NPS Organic Act, which was approved by Congress and signed into law on August 25, 1916. Of the 391 sites managed by the National Park Service of the United States, only 58 carry the designation of National Park.

[http://www.youtube.com/watch?v=nQ7rFA4TQmA]

Following the idea established in Yellowstone there soon followed parks in other nations. In Australia, the Royal National Park was established just south of Sydney in 1879. Rocky Mountain National Park became Canada’s first national park in 1885. New Zealand had its first national park in 1887.

In Europe the first national parks were a set of nine parks in in 1909; Europe has some 370 national parks as of this writing. In 1926, the government of South Africa designated Kruger National Park as the nation’s first national park. After, national parks were founded all over the world. The Vanoise National Park in the Alps was the first French national park, created in 1963 after public mobilization against a touristic project.

[http://www.youtube.com/watch?v=HBb9DoziY7M]

List of United States National Parks by State

This is a list of United States National Parks by state. Some states lack a national park; others have many. Two territories have national parks, and are included on this list. Some parks encompass land in more than one state and are listed more than once. Parks vary greatly in size, but the largest are generally in the West and Alaska, where large blocks of undeveloped and government-owned land existed.

State National Parks Year Created Area (mi²) Area (km²)
Alaska Denali 1917 9,492 24,585
Alaska Gates of the Arctic 1980 13,238 39,460
Alaska Glacier Bay 1980 5,130 13,287
Alaska Katmai 1980 5,288 13,696
Alaska Kenai Fjords 1980 1,094 2,833
Alaska Kobuk Valley 1980 2,609 6,757
Alaska Lake Clark 1980 6,297 16,308
Alaska Wrangell – St Elias 1980 20,587 53,321
American Samoa American Samoa 1988 14 36
Arizona Grand Canyon 1919 1,902 4,927
Arizona Petrified Forest 1962 341 885
Arizona Saguaro 1994 143 370
Arkansas Hot Springs 1921 9 22
California Channel Islands 1980 390 1010
California Death Valley 1994 5,219 13,518
California Joshua Tree 1994 1,234 3,196
California Kings Canyon 1940 722 1,869
California Lassen Volcanic 1916 166 429
California Redwood 1968 176 455
California Sequoia 1890 631 1,635
California Yosemite 1890 1,189 3,081
Colorado Black Canyon of the Gunnison 1999 51 133
Colorado Great Sand Dunes 2004 133 343
Colorado Mesa Verde 1906 81 211
Colorado Rocky Mountain 1915 415 1,078
Florida Biscayne 1980 207 700
Florida Dry Tortugas 1992 101 262
Florida Everglades 1947 2,357 6,105
Hawaii Haleakala 1916 46 118
Hawaii Hawaii Volcanoes 1916 505 1,309
Idaho Yellowstone 1872 3,470 8,980
Kentucky Mammoth Cave 1941 83 214
Maine Acadia 1919 47 123
Michigan Isle Royale 1940 894 2,314
Minnesota Voyageurs 1975 341 882
Montana Glacier 1910 1,584 4,101
Montana Yellowstone 1872 3,470 8,980
Nevada Death Valley 1994 5,219 13,518
Nevada Great Basin 1986 120 312
New Mexico Carlsbad Caverns 1930 73.07 189
North Carolina Great Smoky Mountains 1934 814 2,108
North Dakota Theodore Roosevelt 1978 110 285
Ohio Cuyahoga Valley 2000 51 134
Oregon Crater Lake 1902 286 741
South Carolina Congaree 2003 33 88
South Dakota Badlands 1978 379 982
South Dakota Wind Cave 1903 44 114
Tennessee Great Smoky Mountains 1934 814 2,108
Texas Big Bend 1944 1,252 3,242
Texas Guadalupe Mountains 1966 135 350
U.S. Virgin Islands Virgin Islands 1956 23 59
Utah Arches 1971 119 309
Utah Bryce Canyon 1928 56 145
Utah Capitol Reef 1971 378 979
Utah Canyonlands 1964 527 1,366
Utah Zion 1919 229 593
Virginia Shenandoah 1935 311 805
Washington Mount Rainier 1899 368 954
Washington North Cascades 1968 789 2045
Washington Olympic 1938 1,442 3,734
Wyoming Grand Teton 1929 484 1,255
Wyoming Yellowstone 1872 3,470 8,980

PBS brings you a preview of the newest Ken Burns documentary series,
THE NATIONAL PARKS: AMERICAS BEST IDEA,.

The 12-hour, six-part documentary series, directed by Burns and co-produced with his longtime colleague, Dayton Duncan, who also wrote the script, is the story of an idea as uniquely American as the Declaration of Independence and just as radical: that the most special places in the nation should be preserved, not for royalty or the rich, but for everyone.

Only on PBS.