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Drug Avastin

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As more potentially life-saving, but expensive drugs come to market, patients and insurance companies have difficult decisions to make. While in theory people would pay anything to save their own life or that of a family member, the efficacy of some of these drugs is uncertain and some are not curative. For example, Genentech's drug Avastin is not marketed as a life-saving drug, but as a life-extending drug and is estimated to cost as much as $100,000 per year. As a result of the above scenario please research Avastin on the web (here are is a link to get you started: http://topics.nytimes.com/top/news/business/companies/genentech_inc/index.html), and then answer the following questions based on the research discovered on Avastin:

â?¢ Who (free market, insurers, Government, drug companies) should determine how demand is met? Use economic theory to support your claim.
â?¢ Do you believe that the government has an obligation to set guidelines for who receive these drugs? If so, what should those guidelines be?
â?¢ Should the insurance industry be obligated to pay for Avastin treatments and if so, how does this impact other policy-holders? Why or why not?

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â?¢ Who (free market, insurers, Government, drug companies) should determine how demand is met? Use economic theory to support your claim.
â?¢ Do you believe that the government has an obligation to set guidelines for who receive these drugs? If so, what should those guidelines be?
â?¢ Should the insurance industry be obligated to pay for Avastin treatments and if so, how does this impact other policy-holders? Why or why not?
Step 1
If free market were to determine how demand is met, then the equilibrium price of Avastin or Bevacizumab will be $100,000 per year. This would make Bevacizumab not affordable for a large number of cancer patients. Also, there is a bunch of side reactions of the drug that the patent has to bear. These include hypertension, and hemorrhage. If the insurers were allowed to determine how the demand is met, the insurers would not pay the claims of ...

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