Gardasil Case

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CLASS: UGBA 101A

Section: 12:30 to 2pm

Gardasil Case

Gardasil is an innovative HPV vaccine that dramatically reduces the chances of contracting cervical cancer and warts. Merk and Co. Inc is bringing Gardasil to market. In tests Gardasil proved effective in preventing 100 percent of cancers related to HPV types 16 and 18 in women not previously exposed to HPV virus and was 99% effective in preventing genital warts caused by HPV types 6 and 11. Although both man and women can be contract HPV virus, Gardasil is targeted towards women aged 9 to 26.

In order to know the value of this vaccine we need to know the probability of women within this age range to contract HPV and if they do the probability of them contracting a lethal strain of HPV and further more the probability that this strain is 16 and 18 because this is the particular strain that Gardasil can prevent. The potential of dying if infected by HPV strain 16 and 18 also must be put into consideration.

My price is $75 for this vaccine. How did I come up with this price? Lets look at certain numbers important in determining the price and value of Gardasil:

Target Users in the US: Women aged between 9 and 26

Population size: 35 million

Probability of HPV infection: 70 percent

Possible cost of production: $10

Highest priced vaccine: $75

R&D Cost: $1.2 Billion

Number of pap tests in the US in a year: 55 million

Percentage of deaths from cancer: 4%

At the suggested price of $120 the company stands a chance of meeting and even exceeding its financial goals if 70% of the women between 9 and 26 purchased the vaccine. The problem is that this price is high and there is a chance that insurance companies are going to be unwilling to cover the drug, this means that women would have to pay out of pocket for this vaccine. In order for them to be willing to pay such an amount they have to have good reason to believe that they are actually at risk of contracting cervical cancer. Since the number of deaths from cervical cancer is reducing in the US due to pap tests it is unlikely that they will be very motivated to spend such amount of money on something they are not really certain they are going to contract. Like the article states, the deaths from cervical cancer are higher in developing countries. This means that women in those countries would be more willing to purchase this product at any price, the problem is that they are so poor that they cannot even afford the vaccine if it were even half the current suggested price.