The market for Anti-Malaria Drugs
A graph showing the demand for anti-malaria drugs in Southeast Asia.
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How does the equilibrium change if counterfeits enter? What is their marginal cost function?
The presence of counterfeits in the market affects the cost of products since counterfeited products sell at a lower price. This in turn affects the transverse state of equilibrium and causes hysteresis since counterfeits affect equilibrium positions.
Contrast with Other Diseases
Malaria is a disease that is not communicable from human to human.
Does an infected individual choose a fake anti-malaria drug to impose an externality on others?
Malaria is not a communicable disease. As such, an individual choosing a fake anti-malarial drug cannot impose an externality on others.
What if the disease were HIV/AIDS or tuberculosis?
Both AIDS and tuberculosis are communicable. As such, without effective treatment and appropriate drugs, an individual is likely to spread the aforementioned diseases to healthy people.
Examine the cause of the problem and why it exists in some countries.
Why does the problem afflict the poor and developing economies?
The problem of malaria in poor countries has been attributed to the proactive nature of malarial vectors such as indoor and outdoor biting habits, increased susceptible population of children under 5 years of age due to high birth rates, the inadequacy of funds to buy drugs, and a much-reduced budget because of adverse socioeconomic conditions as well as new breeding sites for mosquitoes such as dams and irrigation schemes built to trap water for development projects (Abraham, 2004, p. 44).
Additionally, other factors include migration by people to regions where transmission is high from non-malarial areas, civil unrest and armed conflicts that cause people to be displaced, and sometimes these people settle under in areas where transmission of malaria is high. Another factor would be the resistance that mosquitoes have developed over the years against some drugs and insecticides (Abraham, 2004, p. 47). Besides, in some poor regions, the spread of malaria is attributed to factors such as population movement, climatic changes, and resistance to anti-malarial drugs.
It is imperative to note that eradication of this health scourge in poor countries and economies cannot be attainable due to a lack of indigenous capacity to initiate eradication programs such as those that are being carried out by developed nations (Rita, 2001, p. 109). Falciparum malaria is a complex disease with clinical and a non-uniform yet patchy distribution of manifestations. At this point, it is imperative to observe that there are other myriad health challenges and issues that poor countries have to squabble with on a daily basis. In fact, their budgetary allocation on healthcare matters is far from adequate.
What government institutions or laws exist and how do they protect the consumers? Firms?
In southeast Asia, the high demand for anti-malarial has attracted an unscrupulous group that peddles spurious anti-malarial drugs. These challenges demonstrate the urgency with which there is a need for concerned health organizations to monitor drugs and protect consumers. These interrelated and complex challenges demand an amalgamated, unwearied, and protracted response (Narain, 2008, p. 2).
A lot of collaboration, especially with those responsible for research and control, has provided the best chance for successfully combating the disease. Besides, there has been sustained government and non-governmental organizations support, a strong international collaboration and a control strategy based on strong research in South East Asia geared towards trying to ameliorate damages done by these diseases to economies, societies, and families.
To curb the spread of malaria and fake malarial drugs in South East Asia, many organizations have come up to offer their support (Rita, 2001, p. 96). Such organizations include Fogarty International Center (FIC) and the World Health Organization (WHO) among others. They have set up various programs and projects to provide information on how diseases are spread and how they can be prevented through skits, lectures, posters, and the media.
What problems exist on the demand side regarding whom consumers trust and the training of those individuals?
Demand and supply for products in the market are driven by numerous factors including a trust for a brand and training of suppliers (Newton et al., 2001, p. 1948). When either of the mentioned factors fails to meet the needs of consumers because they are counterfeits or ineffective, the demand for the services or products will fall.
Patents – Government-Created Monopoly
When a company develops a new drug, it gets a patent. The government authorizes the creation of a monopoly. Why does it do this knowing that monopolies create a deadweight loss?
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Most governments, after developing a new product like a drug, seek to use it to monopolize a market. This intention to monopolize results in it making more profits at the expense of other firms which increasingly become unsuccessful since the new products dominate over theirs (Schermerhorn, 2011, p. 132). As such, companies enjoying monopoly power in the market enjoy supernormal profits.
Potential entrants in the drug market face exploitation because of the asymmetry in cost existing between them and the incumbent firms. As such, incumbent firms enjoy a cost advantage and economies of scale over other companies that want to enter the market. Additionally, the government does this to block the entrance of other new drug suppliers and firms in the market (Anon., 2008, p. 32). It uses predatory pricing policies to gain dominance and to lower or cut down the prices of its commodities.
Ratings of Other Products and Services
There are other products or services that are also rated, by government agencies and by private firms. Describe another product or service that is rated by a government agency and by private firms.
Different organizations rate products and services differently. One of the common products rated by private firms includes drugs. On the other hand, government agency also rates among other things, drugs like heroin and cocaine. The ratings are made based on evidence that is scientifically proven on the potential harm it has to society and individual lives (Newton et al., 2001, p. 1948).
What characteristics do the government agency rate? What characteristics do the private firms rate?
In the rating of drugs, private firms consider access for continuous adherence, cost, patient acceptance, and dosing. On the other hand, most governments focus on individual safety risk, influence on co-morbidities, and t duration within which the effect will last.
Abraham, C. 2004. Into Africa. New Scientist. 181(2433), 44, 46-47.
Anon. 2008. Economic & Social Research Council; Credit crunch threatens new medicines. Web.
Narain, J. 2008. Malaria in the South-East Asia Region: Myth & the reality. Web.
Newton P. et al. 2001. Fake artesunate in Southeast Asia. Web.
Rita, J.S. 2001. A comparative perspective on major social problems, Oxford: Lexington Books.
Schermerhorn, R. J. 2011. Management, Danvers: John Wiley and Sons, Inc.