HCI_H1EconPrelim Paper(with mark scheme)

ECONOMICS 8819/01 29 August 2008 3 hours Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your index number and name on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Section A Answer all questions. Section B Answer one question. At the end of the test, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. HWA CHONG INSTITUTION College 2 Preliminary Paper 2008 General Certificate of Education Advanced Level Higher 1 This document consists 4 printed pages.

Extract 1: Global Pharmaceutical Industry The global pharmaceutical industry consists of thousands of companies, including biotech firms, generic drugmakers, contract research organisations, wholesalers and retailers. On top of them all sits “Big Pharma”— a dozen or so multinational firms with headquarters in Europe or America. Their sales account for roughly half of the world's $500 billion retail drug market. On the face of it, Big Pharma firms are in a business to die for. Populations in rich countries—and increasingly developing ones too—are getting older, and many people suffer from chronic conditions. But behind the healthy glow, a more worrying picture emerges. In the past few years large drug companies have had trouble getting new drugs out of their pipelines and into the market. At the same time, several high-profile medicines have been withdrawn because of safety concerns. The internal struggles of the world's leading drugmakers have been compounded by a broader social debate about the purpose and practices of the industry, again mostly in America. The US pharmaceutical industry is dominated by a few large firms that make up a significant share of the market. It has been argued that the drug industry derived a higher rate of return on its investment than other American industries. It has been argued that the pharmaceutical companies have at times exaggerated in their claims for the therapeutic value of certain drugs. It has been argued that the drug companies have spent an unreasonable portion of their budgets in order to indoctrinate doctors so that they would prescribe high-priced trade-marked products. Some critics of the drug industry argue that drugmaking should be taken out of private hands and put in the public domain; after all, many of the basic discoveries that drug companies develop and profit from came from universities and government institutes in the first place. But there is little evidence that governments or universities are any better than the private sector at bringing new drugs to market. T