Eli5: What is the purpose of patents in the pharmaceutical industry and what kind of impact do they have on drug pricing?
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It’s to allow the company that spend many years and millions or billions of dollars to develop the drug to recoup that R&D investment and profit from their creation. It obviously means higher drug prices, but that’s typically better than no drug at all. Once the patent expires and generics can hit the market, prices come down due to the competition.
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