BUS 187 case #2 - BUS3 187 Section 7 Kepple 10/11/10 Drug...

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BUS3 187 Section 7 Kepple 10/11/10 Drug Development in the European Union Case 1. Regulations and institutional arrangements in the EU has put European drug companies at a disadvantage vis-à-vis their competitors in the United States. Because of EU regulations, European drug companies have a very difficult time making a sufficient profit on their new drugs. There are extensive price controls made by health care providers on brand name drugs throughout the EU. However, in the United States, there aren’t any price regulations on new brand name drugs. Price controls vary from country to country in Europe, causing arbitrage. Distributors buy the drugs in countries where the prices are cheaper and sell them in countries where the prices are higher. This results in sales reduction of about €6 billion for the pharmaceutical companies. Although the EU is an economic union, not all of the members have adopted the currency (the euro), and there are still tax rate differences and regulations across countries and some markets. An economic union involves the free flow of common external trade policy, common currency, harmonization of members’ tax rates, and a common monetary and fiscal policy. 2.
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This note was uploaded on 12/11/2011 for the course BUS 187 at San Jose State University .

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BUS 187 case #2 - BUS3 187 Section 7 Kepple 10/11/10 Drug...

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