A pharmaceutical company has been selling the prescription allergy drug Aquanox to retail pharmacists at a price
Question:
A pharmaceutical company has been selling the prescription allergy drug Aquanox to retail pharmacists at a price of $3.20 per tablet, considerably above the company’s variable costs of $0.52 per tablet. The company’s director of marketing has recently suggested that they consider lowering the price, but the VP of the division rejected this idea. The VP’s explanation was that they should not even consider lowering the price until the drug’s high research and development costs have been recovered. Do you agree with the VP’s reasoning? Why, or why not?
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