Short answers, pulled from the story.
Supracompetitive pricing is pricing set above the level that a competitive market would sustain. It can arise from a legitimate legal advantage such as a patent, or from anti-competitive behavior such as predatory pricing that eliminates rivals and allows a company to charge monopoly-level prices.
Predatory pricing is the first phase of a two-stage strategy, where a company sets prices below cost to drive competitors out of the market. Supracompetitive pricing is the second phase, where the company raises prices above competitive levels to recover losses and generate profits once rivals have exited.
According to Baumol (2003), supracompetitive prices are used to gain a monopolistic market position and recover losses from the predatory phase, and they have no legitimate business justification beyond recouping those predation-phase losses.
Opponents of regulation argue that supracompetitive prices are self-correcting because they attract new market entrants who undercut the dominant firm. They also argue that high prices reward risky investment, and that state intervention can discourage future investment by reducing returns in the market.
Predatory strategy becomes rational when a company operates across multiple markets, creating a reputation that deters new entrants; when information asymmetry prevents rivals from recognizing the predatory pattern; and when significant entry barriers prevent market self-correction, particularly in smaller economies.
A drug company that patents a new formulation can bar competitors from the market until the patent expires, unless rivals license rights from the patent holder. Combined with regulatory approval hurdles, this creates barriers to entry that allow the patent holder to sustain supracompetitive prices for the life of the patent.