You are working at Johnson & Johnson and one of yourresponsibilities is to set p

You are working at Johnson & Johnson and one of yourresponsibilities is to set prices for new drugs. The firm hasinvented a cure for Aids and is protected by patent. The cost forthe one time injection that cures the disease is $100 and includesamortization of the development cost (The $1 billion cost todevelop the product is included in the $100) and the cost rawmaterials. Assume that insurance companies currently spend $200000to treat an Aids patient. Assume 20% of the world population iscovered by insurance or socialized medicine.