Agree/Disagree and Why?

Question: https://managerialecon.blogspot.com/2016/11/posts-on-price-discrimination.html

For your initial response to this thread, pick at least TWO different posts/examples and discuss THREE concepts of Price Discrimination in the context of your chosen examples.

Answer: There is a global price discrimination of the drug Solvadi in the USA and India. Gilead is the pharmaceutical biotech that has invented this drug and it is used for the treatment for hepatitis C. In 2014, the 12-week treatment of hepatitis C using Solvadi is $84,000 in the US and$1800 in India (Froeb L, 2014). It was one of the most effective drugs with not many other effective alternatives at the time of discovery. The high price in the United States are due to several reasons within health economics such as high cost of innovation, lack of national price drug negotiations, and free market economy (Brandy H, 2018). Some medicines have no alternative and therefore, there is no competition. In other words, it is monopoly. One of the key points is that the high price also covers the failures of other molecules that never get into the market. In the United States, the Medicare accepts the price setup by the pharmaceutical industry and there is not much space for bulk negotiation (http://www.cure-hepc.com/). Gilead has partnered with several local Indian companies, so that it can be manufactured and distributed at much cheaper price than the US. The economic difference between two countries is also a factor and the average Indian income is significantly different than the US income. It is understood that even with $1800 cost in India, Gilead have made profits. However, the price is excessively high in the United States, which brings backs to the question related to the balance between innovation and greed.

The other example is the Best Buy price discrimination between in-store and online customers. This is something that I have experienced and sometimes stores put a disclaimer that online prices could be cheaper than in-store prices. This is an example of indirect price discrimination. I think the way we shopped has changed significantly in the last decade and on-line sales has significantly increased. Consumers are also much more informed because of the advancements in technology.

References:

Henry, Brandy. (2018). DRUG PRICING & CHALLENGES TO HEPATITIS C TREATMENT ACCESS. Journal of health & biomedical law. 14. 265-283.

Luke,Froeb. (2014).https://managerialecon.blogspot.com/2014/09/should-you-travel-to-india-for-your.html

http://www.cure-hepc.com/why-is-hepatitis-c-treatment-so-cheap-in-india/