Why are drug companies allowed to be monopolists in the drugs they discover

Question

Quizplus · Accepted Answer

Allowing drug companies to have a temporary monopoly over the drugs they discover, through patents, encourages research because it gives companies an incentive to invest in costly drug development without fear that their investment will be squandered by competitors. This system allows companies to recoup their research and development costs by pricing their drugs higher than their marginal cost, which promotes innovation and the discovery of new drugs. Once the patent expires, other firms can enter the market and produce the drug at a lower cost, which increases competition and makes the drug more accessible to consumers.

Why Are Drug Companies Allowed to Be Monopolists in the Drugs