I. Introduction
In the United States, the average life expectancy of both males and females (at age 65) according to the Social Security Administration is now on average 85 years of age, compared to 70 back in 1960. This large increase in life expectancy can be attributed to the many advances in medical technology, both cost saving, and cost increases, and particularly to the invention of new and far better pharmaceutical drugs. Due to technological improvement in pharmaceuticals, Americans are using them much more and this trend will likely continue. As a result of demand increasing, pharmaceutical drug prices will increase. For example, this summer, the price of EpiPen devices soared from $100 to more than $600 per pack. However, why did the price of EpiPens rise so drastically? Generally, high prices can be attributed to patent protection which provides some degree of monopoly power in the production of a drug throughout the time it is on patent, depending on the amount of potential close substitutes. Even after the patent expires, some prices of pharmaceutical drugs still rise due to the more inelastic demand of the of loyal customers who stay with the brand name even after generic versions become available on the market. However, with EpiPen, and other drugs such as Daraprim, Gleevec, and Vervoy, there are no close substitutes for the brand name drugs. The lack of competition allows monopolistic pricing on the part of companies like Mylan and Turing. In the past years, these drastic price hikes have led people to look more closely into the pricing behavior in the pharmaceutical market to determine the cause of these price increases with the hope of solving the problem.

II. Role of Oligopolies and Patents
Patents protect intellectual property rights, thus promoting innovation because it increases the potential rewards for discovering a new drug or product. However, it does this by granting the company or founder of the product the...