Anticompetitive Practices in the Pharmaceutical Industry: Market Dynamics, Trading Strategies, and the Role of Short-Selling in Promoting Accountability

Murari Ambati and Pravith Munipalle

No 8rd7w_v1, OSF Preprints from Center for Open Science

Abstract: The pharmaceutical industry is important in global healthcare, and drives innovation in drug development ensuring access to life-saving treatments. However, the industries economic structure and competitive dynamics give rise to anticompetitive practices that distort market efficiency, limit consumer choice, and inflate drug prices. This paper shows a comprehensive review of the anticompetitive behaviors employed by pharmaceutical firms, including patent evergreening, pay-for-delay agreements, price collusion, and product hopping. The paper analyzes prominent strategies in the pharmaceutical industries that are anticompetitive through the lens of industrial organization theory, game theory, and market microstructure models. Additionally, we examine the role of financial markets in monitoring and mitigating these inefficiencies, with a particular focus on short-selling. We assess how short sellers act as market watchdogs, and identify overvalued pharmaceutical stocks that may be engaging in rent-seeking behavior. Furthermore, the paper explores the regulatory landscape, and highlight antitrust interventions along with legal challenges. Furthermore, the paper explores recent policy proposals aimed at curbing market manipulation. The paper concludes by discussing potential reforms and market-based solutions to foster competition, enhance price transparency, and improve drug accessibility. Our findings contribute to the broader discourse on financial market oversight, economic efficiency, and the intersection of healthcare economics and capital markets.

Date: 2025-03-03
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:8rd7w_v1

DOI: 10.31219/osf.io/8rd7w_v1

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