Question

1. What determines the price of a drug (be detailed and cover all bases)?

• Demand Side:

• Supply Side: 2.

2. Marketing accounts for a much larger portion of the cost of pharmaceuticals than of other forms of care. Search and find an example of a pharmaceutical advertisement. Provide a description of the advertisement and who the marketing efforts are targeting. Why do you think this is? (short paragraph answer)

Answer 1

1. Considering the market for pharmaceutical drugs, some of the demand-side factors that can possibly determine and affect the price of various drugs the general intensity of any particular disease, health insurance coverage for various drugs, consumer or patient income, availability of substitutes for the drugs in the market, future expectations about the drug prices, and so forth. In this context, to begin with, the overall or general intensity or severity of any disease would expectedly affect the demand for any particular medical drug thereby determining and influencing its market price. As the intensity, heath detriment, or the severity of any disease increases so does the market price of the drugs and vise versa. This is a general observation which essentially explains the reason behind relatively higher demand and prices for medications for high intensity or highly detrimental diseases such as cancer or tuberculosis in comparison to generic or regular diseases with relatively less health detriment or intensity such as cough and cold, fever, regular headaches, etc. Secondly, if the expense of any medical drug is covered by the health insurance companies the consumer demand for the particular drug is usually higher compared to the ones which are not covered by health insurance companies. Therefore, insurance coverage for certain diseases can lead to higher demand for those drugs thereby leading to their relatively higher market prices and vise versa. Thirdly, the individual personal and household income of the patients and their households also pay an influential role in determining the demand and price of any specific medical drug. The demand for medical drugs is evidently sensitive to the income level of the patients and their households and at a generic or overall level, a lower income level of the patients would lead to lower demand for the drugs and vise versa, considering that medial drugs or medicines are normal goods. Therefore, consequently, the consumer or patient income level can also indirectly determine or affect the price of the drugs by affecting their demands. Fourthly, usually higher substitute for any medicine or drug means more choice or options to the consumers or patients to choose or select any concerned drug depending on the particular diseases of the patients. Hence, higher the substitutes available for any medical drug or medicine, the more options or choices there will be for the consumers or patients and lower will be its market price and vise versa. The availability of substitutes is generally inversely related with the drug or medicine prices.

On the other hand, one of the major or foremost factors which affect the price of the medical drugs is the level of market competition among the manufacturers or sellers. Generally, a high level of competition or significantly high number of sellers or manufacturers of any particular drug in the market would exert a downward pressure on the drug price and vise versa. Therefore, high market concentration for any medicine or drug would lead to a higher market price for the particular drug or medicine. Furthermore, various antitrust government regulations and/or leverages in the pharmaceutical industry can also affect the market power of the respective medicine or pharmaceutical companies which substantially influence the market price of various drugs or medicines. In this regard, the patents offered to various pharmaceutical or drug companies for inventing any new drug or medicine in the market preventing any substitute or prototype would lead to monopolization of the particular drug market thereby leading higher price for the particular drug or medicine and vise versa. Moreover, the overall cost of producing/manufacturing and distributing any medical drug or medicine can also subsequently impact its price in the final consumer market. Some drugs or medicines require a substantial amount of intensive and prolonged R and D, repetitive laboratory trials, higher number of commercial distributional channels compared to the other counterparts which can result in relatively higher market price for the formers drugs in comparison to their other counterparts. Additionally, the timing of the official market launch of any specific drug or medicine can also evidently determine its price as any ne drug or vaccine which is invented amidst the widespread outbreak of any extremely detrimental and harmful disease such as COVID-19 would generally have higher price compared to other generic drugs or medicines meant to cure pre-established and general diseases. Hence, the magnitude of the health severity or detriment of any disease and timing of the drug or medicine invention and commercial launch by drug or pharmaceutical companies can also determine and influence price of the respective drug or medicine.

2. One of the popular medicine advertisements that is mostly specialized in the Indian context is of a cough syrup named Glycodine. Glycodine is a cough syrup manufactured and commercially marketed in India and is one of the most popular cough syrup brands in India. Now, the concerned advertisement basically shows a middle class couple bringing their new born child to a spiritual sage or guru for the naming of the baby which is a predominantly common cultural tradition or ritual in India. As the sage or the priest is about to proclaim the name of the baby he started to cough and everyone though that the name of the baby is cough, including the parents of the baby. So from there onwards the official name of the baby became cough and later on in his life it became a lifelong embarrassment and a major issue everywhere including school, neighborhood, college, even in time of his marriage. Now, the boy would have a baby later on as he grew up and following the same tradition he took his baby to the priest for naming of the baby and the priest was about to cough again as he was announcing the name of the baby and suddenly the father forcibly poured Glycodine in his mouth and hence his baby was subsequently saved from experiencing the same lifelong embarrassment and shame as his father.

Based on the storyline and the main content of the concerned advertisement, the particular cough syrup brand is mainly intended to mainly target the middle and lower class section of the population in India who face cough and cold and general cough in their regular lives and are not able to afford expensive medicines or drugs mainly for financial or monetary constraints. Therefore, as a generic medicinal brand, Glycodine is mostly affordable to all economic section of the population with an emphasis on the middle and lower income group. As shown in the particular advertisement, the families in it belong to middle class income group on the basis of their attires, body language, and cultural mindset which essentially highlights the niche marketing strategy of the manufacturing company or brand in this instance based on economic segmentation of the targeted consumer group or section.