Drug prices soar in the U.S. as a result of low PEDs

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Article published: May 5, 2015 – out of date: no longer suitable for your IB Economics commentary

IB Economics syllabus: Microconomics (Elasticities, necessities, govt’ intervention)

Many medicines have a low price elasticity of demand due to the low number of substitutes and the fact that they are necessities. As producers are also aware of this, prices of some much needed (and rare) drugs are soaring in the U.S. At the same time, there is little transparency about how these high prices are set. As consumers and Medicare have to pay more and more, the govt’ is thinking about intervening in this market to lower prices.

Source of image: Lucy Nicholson/Reuters

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By EconDaddy IB Economics tutor|2022-01-13T12:06:34+00:00May 5th, 2015|Micro|Comments Off

About the Author: EconDaddy IB Economics tutor

My name is Daniel Szekely and I work as an IB Economics tutor, examiner and teacher. Having earned an MA degree in Economics at the University of Aberdeen, I started my career as a financial analyst at Morgan Stanley, one of the largest investment banks of the world. Yet, despite the promising career prospects of the banking industry, I decided to make a larger social impact by becoming a teacher. Currently, I teach IB Economics at SEK Budapest International School and have been an examiner for over 8 years. I started EconDaddy as a simple blog to share great articles with my students and others taking IB Economics around the world to use for their commentaries. Being a practicing IB Economics tutor, I have first hand insight into the most common mistakes of students, so the EconDaddy blog now also provides exam and commentary writing tips.