Official Explanation

Argument Construction

Of the five factors indicated in the answer choices, which one most helps to explain all three of the trends?

The information provided about the pharmaceutical industry indicates three long-term trends since 1963: increased research spending, increased profits, and reduction in the number of patents granted.

Note that in a case where the pharmaceutical industry produced fewer—yet more lucrative—new drugs as a result of its increased research investment, its profits might increase even if fewer new patents were granted.

A. Although the stringency of government regulations could help explain increased research spending and the granting of fewer patents, it fails to explain why profits would increase in the long term.

B. Correct. This helps explain all three factors. It suggests that each company has had to boost its research spending, but with a narrowing of focus to produce mass-market drugs with enormous potential for profit. This narrowing of focus could explain why fewer drugs are being patented.

C. Collaboration between pharmaceutical companies and leading universities would not help explain all three trends. It could indicate that the pharmaceutical companies have reduced their investment in their in-house research infrastructure. That is, perhaps these companies find it less expensive to farm out research to universities where a powerful research infrastructure already exists. Even if this could help explain increased research spending, nothing indicates that it would help explain the trends in profits or patents.

D. Companies doing similar or duplicative research could indicate certain inefficiencies in research spending, which could help explain the research-spending trend and the trend regarding patents. Nevertheless, it still fails to explain the trend of increasing profits.

E. This does not explain the trend regarding research spending or the trend regarding patents.

The correct answer is B.