1. Is the monopoly on patented pharmaceuticals warranted? What barrier to entry prevents the re-importation into the United States of pharmaceuticals sold at lower prices abroad (say, in Canada)?
2. The contribution margin percentage on pharmaceuticals exceeds the 55 percent to 70 percent margins on ready-to-eat cereals. Identify three reasons why pharmaceutical margins are higher.
3. Suggest an approach to the big pharmaceutical company problem of differential pricing in the United States, Western Europe, and Japan versus the less-developed world.

The HIV/AIDS crisis has been called the worst pandemic since the fourteenth-century’s Black Plague. The first incident of HIV/AIDS was discovered by the U.S. Centers for Disease Control in 1981. Over the next three decades, 60 million people have become infected and 25 million have died. Most HIV/AIDS cases are reported in the developing world, where 95 percent of those with HIV live today. Beyond social welfare and humanitarian concerns, as a result of globalization and the fastest growing international business opportunities in China and India, AIDS is now everybody’s business. Because the pharmaceutical industry especially relies upon governmental authority to approve formularies for reimbursement, to protect its monopoly patent rights, and to prevent importation of unauthorized, unlicensed imitation medicines, the question of how to price AIDS drugs is a public issue.