Price intervention

India may ban pharmaceutical firms from manufacturing generic forms of patented drugs. This is to comply with WTO rules. The quote of interest was made by Mr. Kamal Nath, Commerce Minister:

"The government will have enormous powers to deal with any unusual price rise."

The danger of price regulation should be evident to India's minsters. One wonders whether the government is willing to risk a shortage of drugs in order to keep prices at an artificial level.

Needless to say, patent protection acts as an incentive for pharmaceutical companies to research and manufacture drugs that they perceive will reap them the most economic benefit. Even, if the firm deems a useful drug to be unprofitable, it often finds its way into the market due to the deals worked out with government, NGOs and pharmaceuticals.