noboru wrote:
The Official Guide for GMAT Review, 11th Edition, 2005Practice QuestionQuestion No.: CR 116
Page: 501
The pharmaceutical industry argues that because new drugs will not be developed unless heavy development costs can be recouped in later sales, the current 20 years of protection provided by patents should be extended in the case of newly developed drugs. However, in other industries new-product development continues despite high development costs, a fact that indicates that the extension is unnecessary.
Which of the following, if true, most strongly supports the pharmaceutical industry’s argument against the challenge made above?
(A) No industries other than the pharmaceutical industry have asked for an extension of the 20-year limit on patent protection.
(B) Clinical trials of new drugs, which occur after the patent is granted and before the new drug can be marketed, often now take as long as 10 years to complete.
(C) There are several industries in which the ratio of research and development costs to revenues is higher than it is in the pharmaceutical industry.
(D) An existing patent for a drug does not legally prevent pharmaceutical companies from bringing to market alternative drugs, provided they are sufficiently dissimilar to the patented drug.
(E) Much recent industrial innovation has occurred in products—for example, in the computer and electronics industries—for which patent protection is often very ineffective.
The Pharmaceutical companies:
- New drugs will not be developed unless heavy development costs can be recouped in later sales
Hence, extend the current 20 year protection.
The author:
- In other industries new-product development continues despite high development costs
So the extension is unnecessary
We need to support the pharma companies.
(A) No industries other than the pharmaceutical industry have asked for an extension of the 20-year limit on patent protection.
If they haven't asked for extension, doesn't mean they don't need it. Irrelevant already.
(B) Clinical trials of new drugs, which occur after the patent is granted and before the new drug can be marketed, often now take as long as 10 years to complete.
Of the 20 years granted to them, pharma companies lose out 10 years on trials. Hence, it brings to the fore the need for extension for pharma companies and supports their cause.
(C) There are several industries in which the ratio of research and development costs to revenues is higher than it is in the pharmaceutical industry.
Here is a possible trap answer. One reason why pharma companies may need extension is "low returns every year" i.e. if the returns in the pharma sector are not as high as those in the other sectors, relative to the research and development cost. But this option is opposite of that. It says that the ratio of research costs to revenues is lower in pharma sector (which means that either research cost is low or revenue is high). This does not help the extension request of pharma sector.
(D) An existing patent for a drug does not legally prevent pharmaceutical companies from bringing to market alternative drugs, provided they are sufficiently dissimilar to the patented drug.
If alternative drugs can be brought in, a patent does not help in recovering the cost anyway. Here is the problem then - how will extending the patent help in recovering the cost? If the patent is ineffective, how will extending an ineffective solution help?
This is similar to saying - there is a law against teenage drinking that fines $100 for first offence. But most teenagers are not caught because they drink the liquor available at home. We should increase the fine to $150.
When the law is not effective, how will increasing the fine help? We need to get some more stringent laws in to remedy the situation.
Hence (D) is not the answer.
(E) Much recent industrial innovation has occurred in products—for example, in the computer and electronics industries—for which patent protection is often very ineffective.
It may help explain why other industries may not care about longer patent periods but it doesn't help explain how longer patent periods will help pharma.
Answer (B)