The NY Times: Runaway Drug Prices
Article published: May 5, 2015 – out of date: no longer suitable for your IB Economics commentary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