Final answer:
When patents on new medications expire, the market becomes competitive as other firms can produce generics, leading to lower prices. The initial monopoly allowed the original firm to recoup R&D investments. Competition policy effectiveness in global markets is a nuanced issue.
Step-by-step explanation:
When patents on new medications expire, the market for those drugs changes from being a monopoly to being competitive. This is because, during the patent period, a pharmaceutical firm has the exclusive right to manufacture and sell the patented drug, allowing it to earn monopoly profits. Once the patent expires, other firms can enter the market by manufacturing generic versions of the drug, which increases competition and often leads to significantly cheaper prices for consumers. Generic pharmaceuticals are less expensive because they do not have to recoup the same level of research and development (R&D) costs as the original patented drug.
Additionally, when discussing the enforcement of antitrust laws by the Justice Department against monopolies such as I it's valuable to consider whether such policies would have the same merit in a global market where firms from multiple countries compete.When patents on new medications expire, the market for those drugs changes from being a monopoly to being competitive. A patent grants the inventor the exclusive right to manufacture and sell the invention for a limited time. Once the patent expires, other companies can enter the market and produce generic versions of the medication, leading to increased competition and lower prices.