The Medicines Compacy

Topics: Price, Costs, Cost Pages: 3 (998 words) Published: April 1, 2013
The Medicines Company What is the value of Angiomax to a hospital? Both Angiomax and Heparin are widely used as an anticoagulant in acute coronary heart treatment. Since Angiomax is a potential substitute for Heparin, Angiomax can be of great value to a hospital. Angiomax has three significant advantages over Heparin. First, the effects of Angiomax are more accurate and dependable which makes the product more predictable. Second, Angiomax doesn’t require a 2-3 hour wait time for results whereas Heparin does. Last but not least, Angiomax is safer for patients that are at risk for bleeding. In all, it is effective in reducing complications or death in a hospital, which lead to a decrease in costs. For example, if there are complications or death during an angioplasty, a hospital will incur an additional $8,000 to their costs. Angiomax can save a potential $280 to $1088. There are 3 different categories of risk to look at. VERY HIGH RISK HIGH RISK LOW RISK 8000*13.6%=1088 8000*7% = 560 8000*3.5%= 280

Nevertheless, there is a costly disadvantage to this product. Production costs are very high when compared to Heparin. Since Heparin has been around for quite some time, price is set at $2 per unit. Angiomax cost is priced at $40 per unit. What price should the Medicines Company charge for a dose of Angiomax? Why? When determining a price on a product, we need to consider its value to the customer and production costs. It is critical to keep in mind the surplus, which will be the total benefit minus the cost. From here, we need to calculate the ceiling and floor pricing of Angiomax. In the first question we discussed the value of Angiomax. Now, what is the cost to replace Heparin with Angiomax? To start with, an ordinary treatment of Angiomax is 1 dose of while 30% will receive 2-3 doses. AVERAGE DOSAGE = 70%*1+30%*2.5= 1.45 In an ordinary treatment of Heparin, a patient will receive 4 doses. We can assume that value will be taken away by the price of Angiomax. The...
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