Determining market prices through the dynamic interaction of supply and demand is the basic building block of economics. Consumers will purchase more of a product as its price declines, all else being equal. Firms, in turn, decide how much they are willing to supply at different prices.

In general, if consumers appear willing to pay higher prices for a product, then more manufacturers will try to produce the product, will increase their production capacity, and will conduct research to improve the product. Thus, higher expected prices lead to an increased supply of goods. This could be the ideal scenario in the current state of price clash between pharmaceuticals, the government, and the consumers.

However, when government adopts a draconian price control, it defines the market price of a product and forces all, or a large percentage, of transactions to take place at that price instead of the equilibrium price. The government price will change only after a lengthy political process, the government price will effectively never be an equilibrium price. This means that the government price will be either too high for the consumers, or too low for manufacturers to do business.