very tough one , will go for A
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Spot on with your reasoning gmat1011

The law said manufacturers can't increase the prices, but it didnt put any restriction on introducing new products with higher prices.
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@Onell: Here is the explanation.

The question says
"Which of the following, if true, most helps to explain why the ministry’s action did not achieve its goal?"

Think like a detective here:
The point is that there is a price freeze. Use of the drugs is not increasing either (more medicine is not being sold). Then why the heck is per capita expenditure increasing? What information would help you make sense of the situation?
If you come to know that manufacturers are introducing newer products to replace the existing ones, could that provide a possible explanation (notice the use of "could" not "will")? Yes, it could.. It does explain if the newer medication is introduced at higher prices. So it COULD help...

Can any of the other options help? No.
E doesn't help. All E says is that some expensive foreign medication is not marketed here anymore. People could be using domestic cheaper products in place of the foreign ones or they could get their medication from neighboring countries which could be cheap (per capita expenditure comes down) or expensive (per capita expenditure stays as before since foreign products were also expensive). It doesn't explain why the per capita expenditure increases.
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A 1+

Where does it say that the new drugs costs more. It might cost less too. How can we assume that it costs more?? I am not convinced.

nice question.
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I choose A, even though not ideal, I feel the other ones are out of scope.

+1.

This is a relatively easy question, mainly due to the other answer choices sort of "suck" for lack of a better word.

We are desperately searching for why? Why is per capita spending still increasing? Whyyyyy?

A. New product doesn't mean price increase. An increase inherently means something exists, then increases. A new product can be set at any price. So, hypothetically, we could have the same number of people, now purchasing new and more expensive products. Hence, per capita spending is still increasing. These basta*** are getting rid of the old products and then creating replacements that are more expensive. Ding Ding Ding - sounds pretty logical, boys and girls...but let's move on.

B. B states population rose, but the stimulus mentions that usage didn't increase. So, who cares and I am still confused.

C. Whoop de doo for these businesses. We are trying to find out why per capita expenditure on these drugs are increasing, even though the usage isn't increasing, nor is the price of the current drugs. But, I will entertain this bull****. Let's assume the costs of the businesses went down from these new manufacturing processes. Terrific. So, these businesses' profits increase! Yay, P = R - C. Yay MBA stuff. So, presumably, we have lower costs, higher profits, but same price. So, uhhhh, why did the spending per capita increase? And why do I care about businesses' profits? I don't. C = irrelevant - leave me alone.

D. This furthers the confusion. So, usage doesn't go up - per the stimulus. And apparently, drugs are now cheaper. However, per capita spending is still increasing. WHAT IS THIS MADNESS?!?!

E. Well isn't this terrific. This answer choice causes me to waste 10 seconds of my test-taking life. Stimulus states: usage doesn't increase. Stimulus also states prices of current drugs do not increase. This answer choice is weak on several levels. What if these foreign manufacturers of drugs NEVER actually sold any of their drugs? Meaning, if they stopped marketing, who gives a sh**? Their products were never purchased in the first place, in other words, their products never had ANY affect on per capita spending! Laugh at this answer choice, roll your eyes, select A and mock the GMAT gods for trying to fool you.

Not. This. Time.

This is a great example of active vs. passive reading. Whenever you read a stimulus, try and attack its holes - rather than read, and hope an answer choice will make sense. I rarely read the question stem prior to the stimulus, yet again, I was an LSATter. It is a waste of time to read something twice . I feel if you attack CR with an active mind, you will perform beautifully. And, have fun with it!

HTH

This is an interesting way to think through the problem in the heat of the GMAT! +1
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710 Debrief. Crash and Burn

Is this a Weaken or resolve the paradox question?

It seems to me that it is a resolve since we have two contradicting sets of facts. But what makes this a possibility for a weaken question is that it has a conclusion.

Any help to explain what question type this is?