Question

8. While not a fair assessment, assume a pharmaceutical company specializing in drugs to lower blood pressure is only concerned with selling more of its product for higher prices. Under this assumption, how many of the following would you expect them to support? • New York's $4.35 tax on a pack of cigarettes. Note that cigarettes have been linked to higher blood pressure. • The NFL's Play60 movement, which encourages individuals to exercise more. • Subsidies aimed at improving nutrition for individuals on government assistance (Medicare, Medicaid, SNAP, etc...). • A prescription drug bill that would expand insurance drug coverage.

Answer 1

Only the last option will be supported.

A tax on pack of cigarettes will lower cigarette consumption, leading to lower number of blood pressure patients, which will decrease drug company sales.

Encouraging individuals to exercise more will reduce high blood pressure, leading to lower number of blood pressure patients, which will decrease drug company sales.

Nutrition subsidy will encourage people to healthy diet, which will reduce high blood pressure, leading to lower number of blood pressure patients, which will decrease drug company sales.

But expansion of insurance drug coverage will increase demand of blood pressure medicine ceteris paribus, increasing price and quantity of the medicine.