Big Pharma uses Price Discrimination

Marathon Pharmaceuticals to Charge $89,000 for Muscular Dystrophy Drug After 70-Fold Increase
by: Joseph Walker
Feb 11, 2017
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TOPICS: Health Economics, Pricing

SUMMARY: Marathon Pharmaceuticals will charge $89,000 annually in the U.S. for a decades-old steroidal drug that was approved for U.S. sale for the first time on Thursday, a price that is as much as 70 times higher than the drug's price overseas. Related article: Marathon Pharmaceuticals will delay the U.S. launch of its muscular dystrophy drug amid mounting criticism of its $89,000-a-year price, including from two members of Congress who launched an investigation Monday.

CLASSROOM APPLICATION: Students can investigate the reasons for the marked difference between the U.S. and U.K. prices, examine the ethics of the price difference, and consider whether Americans subsidize the use of the drug in the U.K.

QUESTIONS: 
1. (Advanced) Research question. Why is the price of deflazacort 50 to 70 times greater in the U.S. than the U.K.?

2. (Advanced) Is it ethical for a pharmaceutical company to set a U.S. price for a drug that is 50 to 70 times greater than it sets for the drug in the U.K.? What criterion could be used judging the ethics of the pricing policy? (In the online interview of the reporter, comment on the reporter's last sentence.

3. (Introductory) Do Americans subsidize use of the drug in the U.K.?

Reviewed By: James Dearden, Lehigh University