4 Columbia Business School $1,000 * 300,000 people = $300 million/year Total government spend = $540 million + $300 million = $840 million Over five years: $840 million * 5 = $4.2 billion So with the new drug, we calculated the break-even at five years to cover $5 billion in R&D. With inhalers, in five yeats, the goverment is spending $4.2 billion. Interviewer: Good, so with this information, summarize for me the minimum and ‘maximum price. Interviewee: Summarize results to interviewer and state what you think the minimum and ‘maximum prices should be. Make sure 10 note that the new pill is a preventative ‘measure, as opposed to the current method of using inhalers as treatment. A good summary will be structured and go back through the steps used in solving the case. At this point you can also bring in other parameters that may not have been discussed in the case such as the price on-patent versus off-patent, or the potential larger international market for this drug. Management Consulting Association Case Book 2007 28