In 2015 the biotech entrepreneur Martin Shkreli bought the marketing rights to Daraprim, which is a drug that treats a parasitic infection. He then raised the price from $13.50 to $750 per pill. 1.Is his conduct in violation of U.S. antitrust laws? 2.In a country that prohibits “Excessive pricing,” would this price hike be illegal? 3.Should the government intervene and pass legislation to put a price cap on the drug? What are the benefits and costs of such a policy?
1.
It is not a violation of US anti-trust laws, because the company, has neither formed the cartel, nor merger and acquisition or restricted the trade for the other firms. It has exponentially raised the price due to the reason of buying the marketing rights and R&D investment took place in the drug. If there is any other player who can sell the formulation at lower prices, then it can be done. So, in no ways the anti-trust laws are being violated. Here, government has granted the legal monopoly to the company.
2.
It will not be illegal, but it may draw negative reputation to the company and people can opt to not to buy the product of the company.
3.
Government can pass the regulation to restrict the price in a particular manner. But, excessive control in price, will have negative consequences as firms will be discouraged to make investments in R&D work, innovation and other risky product development projects. So, rate of getting new innovations, will be slowed down as a consequence.
In 2015 the biotech entrepreneur Martin Shkreli bought the marketing rights to Daraprim, which is a...