Choose a pharmaceutical product that is on the market today and answer the following by doing some research about the drug online. a. Explain what the drug is and what it is used for, and find an estimate of its price. Are there available substitutes for this drug for its primary uses? b. Look online to see if you can find estimates of the markup above costs on the pharmaceutical you have chosen. If you cannot find this, see if you can find information on the history of markups of that pharmaceutical (often times you may not know the markup above cost, but can see that the drug has seen some % markup in price since it was introduced – this growth in the price will suffice as a proxy for markup above costs of production). c. Based upon our discussion of the relative price setting power of different goods (use the Lerner Index), how does your understanding of the use of the good and the available substitutes explain the markups you observe on this drug?
Choose a pharmaceutical product that is on the market today and answer the following by doing some research about the drug online. a. Explain what the drug is and what it is used for, and find an estimate of its price. Are there available substitutes for this drug for its primary uses? b. Look online to see if you can find estimates of the markup above costs on the pharmaceutical you have chosen. If you cannot find this, see if you can find information on the history of markups of that pharmaceutical (often times you may not know the markup above cost, but can see that the drug has seen some % markup in price since it was introduced – this growth in the price will suffice as a proxy for markup above costs of production). c. Based upon our discussion of the relative price setting power of different goods (use the Lerner Index), how does your understanding of the use of the good and the available substitutes explain the markups you observe on this drug?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Question
Choose a pharmaceutical product that is on the market today and answer the following by doing
some research about the drug online.
some research about the drug online.
a. Explain what the drug is and what it is used for, and find an estimate of its price. Are there
available substitutes for this drug for its primary uses?
available substitutes for this drug for its primary uses?
b. Look online to see if you can find estimates of the markup above costs on the pharmaceutical
you have chosen. If you cannot find this, see if you can find information on the history of
markups of that pharmaceutical (often times you may not know the markup above cost, but
can see that the drug has seen some % markup in price since it was introduced – this growth in
the price will suffice as a proxy for markup above costs of production).
you have chosen. If you cannot find this, see if you can find information on the history of
markups of that pharmaceutical (often times you may not know the markup above cost, but
can see that the drug has seen some % markup in price since it was introduced – this growth in
the price will suffice as a proxy for markup above costs of production).
c. Based upon our discussion of the relative price setting power of different goods (use the Lerner
Index), how does your understanding of the use of the good and the available substitutes
explain the markups you observe on this drug?
Index), how does your understanding of the use of the good and the available substitutes
explain the markups you observe on this drug?
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