Price Discrimination in Practice: Voluntarily Discounts

Price Discrimination in Practice
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Price Discrimination in Practice
The healthcare industry is facing many key issues today that have a huge impact on millions of people worldwide. The most prominent is drug pricing discrimination. Price discrimination occurs when customers are charged different prices for the same good or service for reasons such as the ability to pay or difference in demand (Bush, 2005). This paper explores this issue of drug price discrimination.
In the early 1990s, the National Institutes of Health (NIH) proposed a solution to the problem of drug inaccessibility and high prices. Brody (1996) revealed that the announcement stated that those in need of new drugs developed in part by government funding should not be denied access because of the price, and that pricing should be responsive to the health and safety needs of the public. Kerber (2004) suggested a solution was provide discounted drugs to developing nations is to prevent people from copying existing drugs and selling them to developing countries at discounted prices. Furthermore, a lot of time and money has been invested in the research and development of a new drug and it would be unfair to allow a company to simply copy the drug and sell it at a very low price.
The problem of high pharmaceutical drug prices is real and it is affecting millions of Americans. An article by Bush (2005) revealed that there are more than 45 million Americans who are uninsured. The pharmaceutical market has a potential to charge a different price at manufacturing and dispensing levels. High prices paid by the uninsured are becoming a concern. This is because. The price charged to a particular buyer depends on their sensitivity to the price. Most of the uninsured buyers are least likely to react to the quoted price because the dec...