Pharmaceuticals Multiple answers

Pharmaceuticals Multiple answers

Chapter 11: Pharmaceuticals

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True/False

1)  In the presence of insurance coverage, over the counter purchases of drugs like acetaminophen, ibuprofen and naproxen sodium will have a higher elasticity of demand than physician-prescribed drugs.

 2)  Jay’s physician prescribes a 15-day supply of a pain relieving medication which costs Jay $15 in co-pay because he has an insurance policy which covers prescription drugs.  After 15 days, Jay is still in pain and believes that the medicine alleviates his pain about the same as over the counter ibuprofen.  Ibuprofen costs $15 for a 15-day supply, and Jay’s price elasticity of demand is about the same for both products. Jay will eventually decide to purchase the ibuprofen over the counter because renewing his prescription involves an additional opportunity cost of the doctor visit.

3)  While generics account for more than three quarters of all prescription drugs sales by volume, they account for only 10% of all prescription sales revenues.

4)  It was not until after World War II, that it became clear that control over drug safety mechanisms should rest with governmental agencies rather than with an industry watchdog group.

)  The average percentage of revenues spent on R&D by pharmaceutical companies in the U.S. has been stable for the past three decades at about 17%.

6)  One of the most widely used estimates of the average cost of developing a new drug has been at about $80 million (in 2000 dollars).

)  Economies of scale are a common feature of R&D in the pharmaceutical industry.

8)  Phase I of FDA testing involves human testing for efficacy of an Investigational New Drug (IND).

9)  Once a firm has isolated and tested a drug on animals, it files a New Drug Application (NDA) with the FDA.  Then, three phases of testing take place over a period of several years.

10)  On average, R&D expenses consume a larger share of pharmaceutical funds than marketing and administrative costs.

Multiple Choice

11)  Most studies have shown that the initial stages of the pharmaceutical manufacturing process usually give rise to _________________ , while after the large fixed (sunk) costs are finally paid off, manufacturing of pharmaceutical products exhibits ________________________________.

1. a)  economies of scale; diseconomies of scale.
2. b)  diseconomies of scale; economies of scale.
3. c)  constant returns to scale; diseconomies of scale.
4. d)  economies of scale; constant returns to scale.
5. e)  diseconomies of scale; constant returns to scale.

12)  What does the term “detailing” mean in the pharmaceutical industry?

1. a)  An exceptionally thorough cleaning, washing and precise coating process at the final stages of the production of each batch of pills, which will favorably show off all the details of the pill.
2. b)  Detailing involves a representative of the pharmaceutical firm calling on an individual physician to set up a meeting, where the representative will discuss one or two products with the physician.
3. c)  The process of developing a pill design (shape, color, engraving, and other artistic and decorative details).
4. d)  Careful attention to every detail of the drug manufacturing process.
5. e) The requirement to the drug manufacturers to include the details of the drug side effects in journal and TV advertisements.

13)  One act passed by the federal government aimed at reducing the monopoly power of patented drugs was

1. a)  the 2003 Medicare Modernization Act.
2. b)  the 1984 Hatch-Waxman Act which established a process whereby generic drugs could be fast tracked for approval if they could prove they were the bioequivalent of an already approved patented drug.
3. c)  the TRIPS agreement which also provided special provision for AIDs drugs to the poor.
4. d)  the Harris-Kefauver Drug Act Amendments which slowed down the rate at which new drugs were approved by the FDA.
5. e)  the 1997 FDA modernization act which gave pharmaceutical companies ability to provide some information about unapproved uses of drugs.

14)  The hierarchy of funds to the pharmaceutical market in order of level of expenditures is

1. a)  wholesalers, mail order and retail pharmacies, pharmacy benefit managers, brand name pharmaceutical companies.
2. b)  mail order and retail pharmacies, wholesalers, pharmacy benefit managers, brand name pharmaceutical companies.
3. c)  brand name pharmaceutical companies, wholesalers, pharmacy benefit managers, mail order and retail pharmacies.
4. d)  brand name pharmaceutical companies, mail order and retail pharmacies, wholesalers, pharmacy benefit managers.
5. e)  brand name pharmaceutical companies, mail order and retail pharmacies, pharmacy benefit managers, wholesalers.

15)  Which drug is likely to be the most profitable for its producer (in terms of average “per-drug” profit)?

1. a)  The drug that was introduced in the market 1 year ago.
2. b)  The drug that was introduced in the market 2 years ago.
3. c)  The drug that was introduced in the market 3 years ago.
4. d)  The drug that was introduced in the market 10 years ago.
5. e)  The drug that was introduced in the market 15 years ago.

16)  What is the average time period for the introduction of a new drug into market?

1. a) 2 years
2. b) 5 years
3. c) 8 years
4. d) 9 years
5. e) 12-15 years

Within the industry sector that you are studying select a company/ organisation of your choice. For this chosen case

1. Briefly introduce the company/ organisation.

2. Identify and explain the product/service they provide, paying attention to core and supplementary service as well as tangible and intangible elements.

3. Using segmentation principles identify and explain the target markets for your chosen case, based on a discussion of the product and the promotion that is undertaken by your chosen company/ organisation. You must be able to identify and discuss at least two different target markets, so choose your case wisely.

4. Select two current key drivers of external change and evaluate how they may affect the service provision of your chosen company/ organisation, with a particular focus on product and promotion.

Word count:

1,500 words ± 10% (excluding citations and reference list)

Learning outcomes to be assessed

This assessment is to test your achievement in all of the following Learning Outcomes: LO1, LO2, LO3, LO4

Learning Outcomes

1. Outline the fundamentals of service marketing.

2. Apply criteria which determine the development of the marketing mix for given situations in order to achieve specified objectives.

3. Appreciate the product life cycle, the need for new product development in view of political, environmental, social and technological change. Section AMSG Sales & Marketing 2016/17 Sem 2 – v1 (January 2017) Page 5 of 25

4. Assess differences in buyer behaviour and market segments – culture, attitudes and perception.