Pharmaceutical costs, Expected Costs and Premium

In May, 2019 a drug, Zolgensma by Novartis will enter the US market with a price of over $2M. The drug is used to treat Spinal Muscular Atrophy which is fatal before age 2.

Novartis says their cost effectiveness analysis shows that it is worth $4M. How is this possible?

Note on Calculations:

Please show all work. Full credit will only be given if all work is shown. If handwriting calculations please write neatly in an organized format with the question section above and with each variable clearly labeled.

Pharmaceutical costs:

Famous “pharma bro” Martin Shkreli gained infamy by increasing the price of Daraprim, a drug necessary for the treatment of HIV and first approved by the FDA in 1953 from $13.50 per pill to $750 per pill.1 The drug Sovaldi was released in 2014 for the treatment of hepatitis C and cost approximately $1,000 per pill.

a) Do you believe this cost is too high? Should there be a price cap?

b) There are approximately 3.5M people currently with hepatitis C in the United States.2 Of those, 5.8% of patients are likely severe enough to be treated each year.3 The estimated annual cost of the pre-Sovaldi “Standard of Care” treatment is $15,000. What is the annual estimated medical cost of medical care for treatment of Hepatitis C in the United States before Sovaldi?

c) Hepatitis C has other costs associated with it besides actual medical costs. Name two costs and describe very generally how you would estimate their financial value.

d) Sovaldi was released in 2014 with an approximate cost of $90,000 per hepatitis C patient treated. What is the one year annual cost of switching 100% of treated patients from traditional “Standard of Care” treatment to Sovaldi? (Assume same number of patients are treated with both therapies)

e) Health plans (including the health plan Professor Block worked for) originally underestimated the cost of Sovaldi. What is one economic reason why a health plan may have underestimated the cost of Sovaldi? Please give a specific example.

2) Expected Costs and Premium

There is a population of 10,000 people. In that population, 10 people have a serious disease that costs $50,000 to treat. 175 people have a less serious disease that costs $800 to treat.

What is the expected total medical spending for the population?

What is the premium that an insurer with 0 administrative costs will charge to insurance each person in this population?

What is the premium that an insurer will charge if administrative costs are 10% of total expenses?

1 Pollack, A. (Sept 20, 2015), Drug Goes From $13.50 a Tablet to $750, Overnight. New York Times.

2 United States Center for Disease Control. Surveillance for Viral Hepatitis — United States, 2015. Atlanta, GA: CDC, 2017. (p. 4)

3 [Example of a White Paper] Aitkin, M, “Comparison of Hepatitis C Treatment and Costs,” IMS Institute for Healthcare Informatics, September, 2016


Looking for help with your homework?
Grab a 30% Discount and Get your paper done!

30% OFF
Turnitin Report
Title Page
Place an Order

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Us

Exemplary Academic Writing Service

At, you are guaranteed of quality service from our professional writers. We maintain consistent communication with customers after placing an order to avoid missing anything that may compromise the quality of delivered work.

Top Writers

Our hiring process is rigorous to maintain the desired quality that has become the core of our business. We expose potential writers to an uncompromising selection process that enables TheQuizlet to pick the best out of the rest. TheQuizlet boasts of a competent team of writers, editors, and professors who work towards accomplishing your goals.

Plagiarism-Free Papers

TheQuizlet has an in-house plagiarism software that lowers the probability of delivering plagiarized papers to our clients. Referencing is guided by the format specified by a customer when placing an order. Our writers are conversant with all referencing formats that include APA, MLA, Chicago, Harvard, and Vancouver among others.

24/7 Customer Support

We understand the importance of effective communication and as such, TheQuizlet has a dedicated customer support department that responds to all client needs. You can easily contact our team through a chat window at the bottom left corner. Additionally, clients can reach us through support’s email or a telephone number available on our contact page. Feel free to contact us at any time and our team of experts will solve all your problems.

Swift Delivery and 100% Money-back Guarantee

When placing an order, ensure that you specify the correct deadline to help our writers work around the provided timeline. At TheQuizlet, we deliver our tasks before the projected deadline to give time for the customer to proofread the work before submission. In the event we cannot deliver a paper on time, we initiate contact with the client to renegotiate a new deadline.

Unlimited and Free Revisions

We urge all our customers to request for a revision whenever they identify a need to amend the paper. Since we understand your concerns, does not charge for revisions. Nonetheless, we encourage customers to be genuine when requesting for revisions.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

TheQuizlet is a one-stop shop for all your writing needs. We tackle each customer’s needs differently to improve the quality of outcomes and meet your expectations.


Academic Help Service

TheQuizlet is committed to delivering quality work on time to ensure our clients get the value for their money.


Admission Essays and Professional Writing

Admission essays are personal, as opposed to other papers. For this reason, our team will request for any information that will enable them to deliver quality work, which allows you to convince the admissions board on why you should be granted the application.


Editing and Proofreading

Our team comprises of qualified researchers, writers, and editors who go through the different papers before delivering them to our clients. Whether your paper is being written from scratch or you want it to be edited, you can trust TheQuizlet for all your needs.


Revision Support

After receiving the final draft, you can request for a revision to incorporate various changes that are aligned with your expectations. All our papers are written in line with the latest writing standards.