I calculated all the information as instructed by the instructor, but I can't think of a good way to take a position for position# 2 and make a value proposition.

Question

Observe the below position and develop a marketing campaign for your argument. What would be your value proposition? How would you market your idea to win the hearts of the citizens and the lawmakers? Support your arguments with data.

Position: The advocacy groups argue that, the taxpayers are literally guaranteeing a fixed income to the drug companies. They oppose the renewal of the license. They suggest that the government should buy the license from the drug companies. Government is willing to pay twice the fixed cost (e.g., $300 million to Company Alpha). The Government will enter into a contract manufacturing with the pharmaceutical companies. Under such arrangement, companies will be producing the drug for the government. It is estimated that this strategy will decrease the variable cost of each capsule by 50%, a substantial savings for the government.

Facts in the Case

Company Alpha is the industry leader in the HIV drug industry. They have invested $150 million in research to produce the drug. This investment is a fixed cost. There are a few other smaller companies in the market. The company market share is given in the Excel data sheet.

The government has put a price ceiling on retail price $1.20 per capsule. Company Alpha sell the drug at a wholesale price at $0.80 per capsule. The variable cost per capsule is $0.40. HIV patients are required to take 5 capsules per day. It is estimated that only 75% of the patients take their medicine regularly. Companies use this usage rate to calculate their revenue and cost estimates.

About 70% of the HIV patients depend on the government to pay for their drugs through Medicare and other subsidy programs. In a way, the government (in fact taxpayers) is literally funding the HIV drug industry.