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5-47 Pricing, Ethics, and the Law Great Lakes Pharmaceuticals, Inc. (GLPI), produces both prescription and over-the- counter medications In January, GLPI introduced a new prescription
5-47 Pricing, Ethics, and the Law Great Lakes Pharmaceuticals, Inc. (GLPI), produces both prescription and over-the- counter medications In January, GLPI introduced a new prescription drug, Capestan, to relieve the pain of arthritis. The company spent more than $50 milion over the last 5 years developing the drug, and advertising alone during the fi rst year of introduction will exceed $10 million. Production cost for a bottle of 100 tablets is approximately $12. Sales in the fi ist 3 years are predicted to be 500,000 750,000, and 1,000,000 botties, respectively. To achieve these sales, GLPI plans to distribute the medicine through three sources: directly to physicians, through hospital pharmacies, and through retail pharmacies Initially, the bottles will be given free to physicians to give to patients, hospital pharmacies will pay $25 per bottle, and retail pharmacies will pay $40 per bottle. In the second and third year, the company plans to phase out the free distributions to physicians and move all other customers toward a $50-perbottle sales price Comment on the pricing and promotion policies of GLPl. Pay particular attention to the legal and ethical issues involved CERT
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