A few years ago the government enacted regulations that rest

A few years ago, the government enacted regulations that restrict pharmaceutical companies ability to supply doctors with marketing materials. As an example, sales reps are no longer allowed to market their drugs by supplying doctors with branded materials like notepads, toys, golf tees, etc. This regulation by itself is sensible and not surprising. What may be surprising is that most pharmaceutical companies were actually in support of these regulations and lobbied the government to pass them.

Why would pharmaceutical companies want to have regulations passed which restrict their ability to give marketing materials to doctors?  Why wouldn’t the companies just voluntarily decide to not give these materials to doctors without the regulations in place?

Solution

Answer:

Pharmaceutical companies want to have regulations passed which restrict their ability to give marketing materials to doctors because it will reduce their marketing cost and also competition among the companies through marketing so they accepted the regulation easily as it will be applied on all the companies and also beneficial for them as it does reduces their cost.

If the companies just voluntarily decide to not give these materials to doctors without the regulations in place than may be all companies will not follow it and try to give marketing materials to doctors for their advertisements which will increase their market share by attracting more customers so companies wants regulations as everyone will follow it.