Recently, the emergence of unintended and harmful side effects in many

Dear Sash143,

It would be good if you can explain your analysis of the answer choices and ask for specific concerns?

Willgetit

Sash143 The conclusion here is ''the whole situation has lead to extract more profits from existing, proven prescription drugs rather than trying to create new ones.''

Question stem : if true, taken together with the information above, best supports the conclusion that the cost of prescription drugs will continue to increase

Option C says "The higher the drug company's profit expectations are for a drug, the more it will be prescribed making it more likely that side effects will be revealed." .It is obvious that they are targeting profit.So if they prescribe those new drugs more,it will create more side effects.As the side effects increase it will further increase the cost of 'existing, proven prescription drugs'.So the answer should C

Dear Experts,

Please explain how option C strengthens the conclusion & why option D is incorrect

Could someone please explain why A is wrong? Since the risk of underwriting a drug-development project is spread over very few projects, premiums on these projects must be very high. As litigation against the drugs drives premiums up, the insurance cost will not be sequestered off to one drug. Rather, the insurance companies will spread it around to other drugs as well. Therefore, the price will go up.

The phrase "continue to increase" is better supported, if a vicious cycle can be shown. Option A does not help complete a vicious cycle.

(Moreover, nothing in the passage indicates that "the insurance cost will not be sequestered off to one drug - rather, the insurance companies will spread it around to other drugs as well" as you indicated. )

Recently, the emergence of unintended and harmful side effects in many nascent, high-profile prescription drugs has resulted in a large increase in claims by drug companies against product liability insurance policies. This has caused product liability insurance premiums on projects that develop new prescription drugs to rise rapidly, which has led drug companies to try to extract more profits from existing, proven prescription drugs rather than trying to create new ones.

Which of the following, if true, taken together with the information above, best supports the conclusion that the cost of prescription drugs will continue to increase?

A) Since the risk of underwriting a drug-development project is spread over very few projects, premiums on these projects must be very high.
B) Whenever approved prescription drugs turn out to have unintended and harmful side effects, it is often very difficult to figure out which component of the drug's chemical formula has caused the side effect.
C) The higher the drug company's profit expectations are for a drug, the more it will be prescribed making it more likely that side effects will be revealed.
D) Most drug-development projects do not result in marketable drugs, so economies of scale in drug development are impossible to achieve.
E) Since many new drugs are developed by large, bureaucratic companies, inefficiencies in drug-development projects are unavoidable.

The reasoning behind the authors conclusion for the increase in the prices for the established drug is because of the high amount of premiums taken on the new development drug projects. The question stem mentions that the reason for those premiums to be higher is because companies tend to take product liability policy frequenctly on the drugs in which the emergence of unexpected side effects. But the authors main reasoning behind the increase in prices of the established drugs is because of the high amount of premiums that are paid against the product liability policies for new developed drugs projects. SO, if I am not wrong, should the reasoning for strengthening the argument be along the lines of the new developed drug projects rather than the emergence of of unexpected side effects on new drugs?

And this is explained in Option (A), where it mentions that certain projects have really have high premiums. And by my pre-thinking, due to these high premiums the price of the established medicines will continue to increase.
My reasoning for option (C) to be wrong was because it mentions "The higher the drug company's profit expectations are for a drug, the more it will be prescribed making it more likely that side effects will be revealed." We are exactly not sure of which drugs they are talking about the already established drugs or the new upcoming drugs. If its already the established drugs, then the chances of side effects are anyways on the lower end, so it doesnt affect the argument. This argument only holds true if and when it is the new released drug.

But as mentioned above the argument about increase in price of the drugs is due to the high premiums on the product liability policy

Sajjad1994 egmat sayantanc2k carouselambra GMATNinjaTwo GMATNinja KarishmaB
Kindly please help regarding this issue and correct me if my reasoning has gone wrong!

Drug companies create new drugs and take liability insurance on them (if someone claims that they were harmed because of the drug and the company needs to pay to settle the claim, they have insurance for that).
Recently, unexpected side effects have surfaced in case of some new, high profile prescription drugs which led to big claims from insurance companies.
So insurance companies have increased the premium they charge to give policies.
So drug companies are trying to extract higher profits from existing drugs instead of creating new ones. (New drugs will have very high premiums for their insurance policies)

Conclusion: the cost of prescription drugs will continue to increase
We need to support this conclusion.

Note that we need to support that the cost will continue to rise. All this has happened in recent times. The cost was lower before but since the side effects story, costs have been increasing. We expect them to keep increasing. Then, a factor that leads to high costs but has remained the same for a long time will be irrelevant. The actual factor that we will consider will be something that will lead to higher and higher costs in the future.

A) Since the risk of underwriting a drug-development project is spread over very few projects, premiums on these projects must be very high.

This is not given to be a recent development. It is given to be the norm. The risk of underwriting is spread over very few projects and so premiums on them are very high. They have become higher now. This doesn't explain why the costs will keep rising.


B) Whenever approved prescription drugs turn out to have unintended and harmful side effects, it is often very difficult to figure out which component of the drug's chemical formula has caused the side effect.

It is very difficult to say how knowing the component will change the circumstances. Since every component would be there for a reason, even if we did know which was causing the problem, would it be possible to remove it? Is it even possible to change the constitution of an approved drug? If we did know the component, will it be possible to make future drugs without it? In any case, the companies are not making new drugs. Hence, all in all, we don't know what impact not knowing the responsible component has on the financials. It is a wayward conjecture to say that this will make the costs continue to rise.

C) The higher the drug company's profit expectations are for a drug, the more it will be prescribed making it more likely that side effects will be revealed.

Correct. This forms a vicious circle. The companies are trying to eke more and more profit from the current prescriptions. So they will be prescribed more. This is likely to lead to more side effects and hence higher claims. Then the insurance costs will increase more which will make the company increase the cost of the drugs more. That will lead to more prescription again and hence the cycle will continue. This does show that the costs is likely to continue to rise.

D) Most drug-development projects do not result in marketable drugs, so economies of scale in drug development are impossible to achieve.

Again, not a recent development. This is the norm. This cannot explain why the cost will continue to rise.

E) Since many new drugs are developed by large, bureaucratic companies, inefficiencies in drug-development projects are unavoidable.

Again, not a recent development. This is the norm. This cannot explain why the cost will continue to rise.

Answer (C)

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