Recently, pfizer and allergan – the makers of viagra and botox, respectively – initiated a $160 billion merger. pharmaceutical companies tend to spend a greater percentage of sales on r& d activities than other industries. the government encourages these r& d activities by granting companies patents for drugs approved by the food and drug administration. for instance, allergan spent large sums of money developing its popular wrinkle-removing neurotoxin, botox, which is currently protected under a patent. botox sells for about $15 per vial. calculate the lerner index if the marginal cost of producing botox is $1.50 per vial. does the lerner index make sense in this situation? no, it is not possible to have a lerner index this high. yes, allergan has a patent-protected monopoly. no, a lerner index this high is not consistent with profit maximization