1. The pharmaceutical industry has been subject to considerable regulation in bringing drugs to the marketplace. Discuss the benefits and costs to society from this policy.

Regulations have been set in the market on the drugs provided by pharmaceutical industry to prevent them from selling substandard drugs to users. Prescription Drug Marketing Act was developed to establish requirements that pharmaceutical industries had to meet in distribution of drugs. Its main purpose was to prevent these industries from selling ineffective, substandard and forged drugs in the supply chain of drugs [1].The law requires that a person who is not the producer or manufacture of a drug should provide a pedigree statement to the buyer. A pedigree statement includes the origin of the drug, their names and addresses of the manufacturer. There have been a lot of incidences on forged drugs that are highly priced or those that have a high market value. Drugs that have a high market value are also subject to forgery.The government prohibits the sale of illegal drugs as its market promotes crime, erodes morals in the society, leads to poverty and diminished health.


Consumers are able to gain access to quality drugs that are essential for their health. Regulations on pharmaceutical industries pose standards to be attained when manufacturing medicines. The manufacturing industries have to meet and adhere to this standards pertaining to the quality of the products.High quality products provide consumer satisfaction as the drug will heal the disease or disorder intended.

Prohibition of illegal drugs from the market poses many benefits for the individual.People in the society are prevented from experiencing diminished health that is caused by consumption of substandard goods [2].Moral behavior is improved in the society in that individuals do not engage in vices of smuggling illegal products. Reduction of moral behaviors in turn reduces the level of poverty in the society as property theft decreases.

Regulations on pricing ensure that consumers are not discriminated by the high prices that can be set by the industry with the malice of obtaining more revenues.Any industry aims at generating more revenue and having access to a large part of the Market. Industries engage in unscrupulous means of obtaining more revenue by increasing the price of the commodity that yields more demand in the market. The government has curbed these acts by setting the maximum prices that drugs can be sold in the market and this has prevented the exploitation of the consumer in the industry.

Regulations on advertisements ensure that consumers are not given the wrong impression on the use of the commodity and prevent patients and customers from exploitation [3].Pharmaceutical industries should avoid advertising their products using features that are not present in the drug. This prevents the consumer from having to buy a worthless commodity or a drug that will not serve the purpose to which it is intended.

Safety of drugs is very essential in the consumption of medicines. Regulations that ensure the safety of drugs to potential users have been set. These regulations ensure that consumers use medicines that are not harmful to their health. Thenumbers of deaths have reduced from the consumption of non- poisonous drugs.

The prescription drug act 2(1) shows that the government will pay benefits to the cost incurred on the purchase of an eligible product [4]. This is a benefit to the consumer in that he or she will be compensated if the drug purchased causes more serious loses than benefits. For example, a consumer purchases a drug to heal a wound on the leg. Instead of the wound getting better, it spreads and becomes worse such that the leg gets amputated. Such a patient is eligible for damages provided the drug was manufactured for that purpose and it adhered to set standards.

Standards protect the economic interest of the consumers and the reliability they have on the products. Consumers rely mostly on products that have been approved by the government of food and drug regulations. They are guaranteed that the product will satisfy and meet the needs for which they intend to use.


The process of inspecting drugs to ensure that they adhere to the set regulation reduces the pace at which these drugs enter into the market hence delaying the medicines to the consumers [5].It takes a lot of time for the drugs to be manufactured and then pass through the Food and Drug Administration to be inspected on their quality and standards. This increases the time at which these commodities reach the market and eventually the time which the consumers obtain them.

The regulations set will reduce the number of industries that will be willing to engage in the manufacture and sale of the drugs. This will cause shortage of drugs in the industry henceincrease in the prices of the available drugs. This poses a disadvantage to consumers in that drugs will be scarce and hard to find and also the costs of the drugs will be high.

Regulations deter innovation. This is because the establishment of a product that meets the costs of the set standard is very costly to the manufacture. Lack of innovation will lead to the consumers using the same products over a given period of time and it becomes monotonous especially if the product does not serve its purpose effectively. Consumers usually aim at having a variety of products to choose from and this need is limited by the set standards and regulations.

Regulations on costs may set costs too high for the poor in the community to afford. Regulations leads to a state of monopoly in industries in that only one or few companies can afford to produce commodities according to the set standards.This creates a situation where the industries can set their own standards but according to the range given by the government.The poor in the society finds it difficult to buy these commodities and can lead to a number of deaths to patients who cannot afford medication.

  1. 2.      As a senior policy maker in the Ministry of Health in a low or middle income country, you have received advice from an economics consultant that user charges for health services should be increased substantially to reduce moral hazard.
    What arguments would you use in your policy advice to the Minister of Health to either support or reject this advice? Provide evidence to support your arguments.
    Note that moral hazard refers to overutilization as a result of patients not paying the full cost of health services.

There are several factors that have to be addressed before deciding on whether to subsidize or increase user charges in health facilities. User charges are essential for the running of the organization but it should not be the key source of finance in the health industry. These charges should not be applied uniformly because it will not affect the poor and the wealthy uniformly [6]. The rich will view the prices as low because they can afford it but the poor will view the prices as high because they cannot afford the medical services. The user charges should be increased according to the average income of the people in the society. An analysis should be conducted before increasing the charges to evaluate the magnitude of this effect on the community. User charges cannot be subsidized because the funds available are not enough to run the health industry and the industry also suffers from financial constraints. Increased charges can increase the revenue of the organization but it cannot fully control the moral hazards in the society. In fact it will increase the hazards because many people in the society who are poor cannot afford to pay for the services at all. If user fees were to be increased then the poor are to be excluded form it [7]. The act of increasing user fees will lead to citizens in the society to reduce the utilization of health facilities but will in turn face more moral hazards such as seeking medication from drug peddlers and others will die because they cannot afford to go to hospitals [8]. It is very embarrassing for our neighboring countries to find out that the citizens have been dying due to expensive health services provided.

However, the benefits of increasing the user charges outweigh the loss that people will undergo in the community. This is because we cannot remain stagnant in relation to the economic growth and the provision of quality health services. People should always have a price to pay in order to improve the society and to reduce the amount of laziness found in the society. Individuals should be discouraged on overutilization of the health services and encouraged to be responsible by paying for those services. People will use their time and money wisely when they realize that medical services are to be paid for. Citizens should realize that quality is expensive and this will motivate them to look for money to pay for quality services. Congestion in hospitals will reduce because people will not be seeking unnecessary treatments. This will pave way to dealing with emergency situations that were previously hindered by the long queues found in the hospitals. The staff in the hospitals will be relieved of the duties of having to deal with unnecessary medical cases. The staff will be having enough time to rest or conduct research on technical illnesses.

I would accept the advice to increase the charges in order to increase the government funds given to such hospitals. These funds will improve health outcomes, finance distributions to the poor and to improve on the social well being of individuals. Increasing user charges will trigger other projects such as employment activities and a sense of responsibilities in the society. People will look for ways of making a living when they realize that the basic needs are not entirely free. Increase in hospital charge will also lead to improvement in the security system to prevent people from stealing to pay for the services. Various governmental teams should be set to advice the citizens not to engage in social vices as law defaulters will be arrested. It is also important to advice them to live peacefully and to help out their neighbors. The citizens should be encouraged to use resources carefully and wisely because in them over utilizing the health resources, they are consuming the services that should be used tomorrow and this will create difficulty in health resources in future.

There has been alleged over utilization of services and abuse of the services by people in the society. This really calls for amendments in the small charges that are available to citizens in the society [9]. Every member has to participate in the cost of health that they consume. User charges will improve the quality of health service due to the increase of this user charges and prevention of unnecessary use of the services. Exceptions should be placed only on special treatments such as child care, elderly health services, prenatal services and other preventive services. Patients should be motivated to pay for quality services than to over utilize non- quality services. User charges will add to a small amount of income for the health services though it is not supposed to be taken as the primary source of income. It reduces the in necessary excessive demand for health devices [10]. The effect of user charges should be considered in advance before the implementation of the increase in charges.


User charges should be increased to reduce the rate of over exploitation of health resources and the unnecessary demand for health services. Quality comes at a price and such a price must be worked for and utilized wisely. This will lead to decongestion in the hospitals and the staff will do quality work due to the reduction of dealing with unnecessary cases. Increase in charge will cause people to be responsible in the society in that they will set medical funds aside and use the available medical services wisely. However, the user charges should not be increased uniformly for both the rich and the poor.The poor should be allowed to basic preventive treatment like child immunization and pre natal services.








  1. U.S Food and Drug Administration.2011, march 3. CPG Sec. 160.900 Prescription Drug Marketing Act—Pedigree Requirements under 21 CFR Part 203. Available from:
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  4. Manitoba laws. 2011 August 17. The prescription Drugs Cost Assistance Act. Available from:
  5. Philipson T, Sun E. 2008 January 3. Regulating the safety and efficacy of prescription drugs. Available from:
  6.  Gertler PJ, Hammer JS. Strategies for pricing publicly provided health services. SSRN Working paper series, Rochester: 2004. Available from:
  7.  The World Bank. Economic and welfare effects of the abolition of health user fee. United States: WorldBank publications, 2004.
  8.  Livingstone I, Belshaw RGD. Renewing development in Sub-Saharan Africa: policy, performance and prospects. United States: Routledge, 2002.
  9. Hufti HM. Healthcare development strategies in the Kingdom of Saudi Arabia. United States: Springer, 2000.
  10. Walley J, Wright J. Public Health: An Action Guide to Improving Health. United States: Oxford University Press, 2010