Health or Money?

http://healthland.time.com/2011/03/21/the-new-cost-of-preventing-prematurity-will-kv-back-off-the-high-price-of-makena/

http://healthland.time.com/2011/03/30/fda-will-allow-cheaper-version-of-pregnancy-drug-to-be-sold/

This is a great example of the potential downfalls of excess demand. This medicine limits the risk of premature birth, which is a fantastic leap in medical advancements, because of all the potential dangers of premature birth. However, this good was going to be sold at $1500, which is not affordable for many. I think, that the price should be lowered because of how essential this product could be in insuring the health of newborn babies. Unfortunately, if the price is lowered, there will be excess demand, and not everyone will be able to purchase this product, because the suppliers will not be willing to produce that much of a good at a lower price. I think that this is the perfect example of an indispensible good that is too expensive at market price, but if the price is lowered, there will not be enough of the good. Our group believes that if some sort of incentive was offered to the producers of the good, then this medicine could be supplied to all expecting mothers, which would be an amazing step in health. This article points out an uncomfortable position that this puts the parents in. They must choose between the health of the baby and their financial security. Because the demand for products ensuring the health of their babies is inelastic, the effect on the economy in the short term will be negative, because parents will be spending more on this medication and less on other goods. Hopefully, this will encourage companies to create a product that is inexpensive that produces the same result as this medicine.