Question

If the current healthcare reform cut the Federal government funding on both Medicare and Medicaid for prescription drugs, what would you expect the impacts on brand name drug market price? How about the impacts on generic drug market price?

Answer 1

If the government funding is less on both Medicare and the Medicad prescription of drugs there should be a decline in the number of people who had enjoyed the benefits of Medicad and the Medicare. So there would be an increase in the market price for brand name drug market. This is because the rise in demand for the products in the brand name drug market. The unbenefited people obviously buy products from this market and it causes a rise in demand and in turn a rise in market price in the brand name drug market. In this case the generic drug market will remain unaffected