Question #2

Article Excerpt: Recently, a new drug to treat Hepatitis C (HCV) called Sovaldi (sofosbuvir) was introduced to the marketplace by Gilead.With impressive clinical trial data significant enough to dramatically change the standard of care for HCV infections, Gilead has set the price tag for this drug at $84,000 for the 12 weeks of therapy, or approximately $1,000 per day. Sovaldi is not alone, Johnson & Johnson released the drug Olysio (simeprevir) to treat HCV for about $67,000 for 12 weeks of therapy.While pharmaceutical companies have released expensive treatments before, these HCV drugs have sparked more debate than other specialty drugs in the past.

Questions:

a)Draw (being careful about the shape of the curves!) a supply and demand model for one of the Hepatitis C drugs. Show what would happen if supply of the drug increased or decreased (label carefully!).

b)Discuss what your diagram shows about the market for Hep. C drugs.