Pharmaceutical companies typically charge slightly inflated : GMAT Critical Reasoning (CR)
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# Pharmaceutical companies typically charge slightly inflated

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Pharmaceutical companies typically charge slightly inflated [#permalink]

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20 May 2007, 20:04
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Pharmaceutical companies typically charge slightly inflated prices for drugs that have a large customer base and are heavily prescribed by doctors to balance the losses such companies experience from producing "orphan" drugs, drugs that are used by so few patients that they can never be profitable. New federal regulations require pharmaceutical companies to limit the price they charge for any drug to cost plus a predetermined percentage profit.

If the statements above are true, which of the following must also be true?

A. New pharmaceutical technology has made advances possible; the drugs produced by such technology, however, are too expensive for all but the most wealthy patients.

B. If pharmaceutical companies do not find another source of income to balance the losses they experience in producing "orphan" drugs, such companies will no longer be able to produce such drugs without compromising overall profits.

C. Some patients already request generic pharmaceuticals, when they are available, because they are typically less expensive than name-brand pharmaceuticals.

D. If pharmaceutical companies reduce the costs of producing most drugs, they will be able to earn more profits despite the new law, and thus will be able to balance the losses they experience from the production of "orphan" drugs.

E. Even though charitable organizations that fund research into the rare diseases treated by "orphan" drugs provide some donations to offset the costs of "orphan" drugs, such donations are declining.
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20 May 2007, 20:35
Juaz wrote:
Pharmaceutical companies typically charge slightly inflated prices for drugs that have a large customer base and are heavily prescribed by doctors to balance the losses such companies experience from producing "orphan" drugs, drugs that are used by so few patients that they can never be profitable. New federal regulations require pharmaceutical companies to limit the price they charge for any drug to cost plus a predetermined percentage profit.

If the statements above are true, which of the following must also be true?

A. New pharmaceutical technology has made advances possible; the drugs produced by such technology, however, are too expensive for all but the most wealthy patients.

B. If pharmaceutical companies do not find another source of income to balance the losses they experience in producing "orphan" drugs, such companies will no longer be able to produce such drugs without compromising overall profits.

C. Some patients already request generic pharmaceuticals, when they are available, because they are typically less expensive than name-brand pharmaceuticals.

D. If pharmaceutical companies reduce the costs of producing most drugs, they will be able to earn more profits despite the new law, and thus will be able to balance the losses they experience from the production of "orphan" drugs.

E. Even though charitable organizations that fund research into the rare diseases treated by "orphan" drugs provide some donations to offset the costs of "orphan" drugs, such donations are declining.

For (B)
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20 May 2007, 21:19
B.
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21 May 2007, 05:20
Down to B & D. But couldn't decide between them. Can somebody explain why B is right and whats wrong with D.

Javed.

Cheers!
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21 May 2007, 10:36
another B.

D is incorrect because "reducing the costs of producing most drugs" was an option that was open even before the federal regulations .
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21 May 2007, 12:18
Straight B
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21 May 2007, 15:12
OA is B.
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21 May 2007, 17:50
Maybe it's just me, but people replying to posts with "A's, B's, C's etc." is helping no one understand why answers are wrong or right.

In a must be true question, you're looking for the following:
(*) Look for the connection between the premises, same words being used

Lets now break down each of the choices:
(A); "New pharmaceutical technology", you see this mentioned no where in the passage, so this one is out right away.

(C); "Some patients already request generic pharmaceticals, when they are avaiable"; again you see this mentioned no where in the passage.

(E); "Even though some charitable organizations", that is all you need to read, as this is not present in the passage.

(D); If pharmaceutical companies reduce the cost of producing "MOST" drugs. In the passage though you see "new federal regulations require pharmaceutical companies to limit the price they chare for ANY drug"
any = all.

Left with B.

Please feel free to correct me if I'm wrong with any of my analysis.

Joe.
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21 May 2007, 21:11
I have never seen such lame options; the question itself is praying "please pick B"
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"Education is what remains when one has forgotten everything he learned in school."

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22 May 2007, 10:14
Euclid 315 wrote:
Maybe it's just me, but people replying to posts with "A's, B's, C's etc." is helping no one understand why answers are wrong or right.

In a must be true question, you're looking for the following:
(*) Look for the connection between the premises, same words being used

Lets now break down each of the choices:
(A); "New pharmaceutical technology", you see this mentioned no where in the passage, so this one is out right away.

(C); "Some patients already request generic pharmaceticals, when they are avaiable"; again you see this mentioned no where in the passage.

(E); "Even though some charitable organizations", that is all you need to read, as this is not present in the passage.

(D); If pharmaceutical companies reduce the cost of producing "MOST" drugs. In the passage though you see "new federal regulations require pharmaceutical companies to limit the price they chare for ANY drug"
any = all.

Left with B.

Please feel free to correct me if I'm wrong with any of my analysis.

Joe.

B it is...Good explanation...Keep up the good work!!!
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22 May 2007, 18:59
B

D is not true because if the company reduces cost of producing a drug, it can only get less amount in profit per drug. overall profit cannot increase if its tied to a percentage of cost of production.
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23 May 2007, 01:34
Down to B and D... I was more inclined towards choosing D but I see the word MOST in the answer choice D which is not the same as what the federal regulations demand...!! B makes sense
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Re: Pharmaceutical companies typically charge slightly inflated [#permalink]

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30 May 2016, 23:56
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Pharmaceutical companies typically charge slightly inflated   [#permalink] 30 May 2016, 23:56
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