Question

What would happen if there was no price ceiling on medicine for a life-threatening illness.

Answer 1

Price ceiling is the upper limit fixed on the price of a drug by the government in order to prevent pharmaceutical companies from charging arbitrary prices . More than that , it is often seen as a policy of the government to ensure drugs are available at affordable rate to the consumers.

Lets see what happen if no price ceiling on medicines for life threatening illness ( these medicines are not generic medicines ) .

Medicines for life threatening diseases , other complicated disorders or chronic illness are not affordable for most of the people , despite having capped it's price. Definitely pharmaceutical companies will start increasing the prices of drugs , if no price cap is set by the government. In order to manufacture these type of medicines companies have to invest more compared to generic medicines. The need to fund their R&D(research and development ) to come up with innovative drugs that can contain these complicated diseases.as the cost that they incur increases , a component of that will also reflect in it's prices .ultimately needy people ( suffering from such illness ) will not be able to purchase such medicines , thus claiming their lives. On the other hand pharmaceutical companies will take a hit , as demand for these drugs reduced or come to zero. Thus there will be a is a lose - lose situation as no parties get benefited out of that.it can possibly trigger recession in economic sector.