PJC H2 ECONS P1

Name: Centre No. / Index No.: / Class: Pioneer Junior College 2017 9757 / 01 / PJC Prelimi nary Examination / 2017 [Turn over] PIONEER JUNIOR COLLEGE, SINGAPORE JC2 Preliminary Examination 2017 Higher 2 ______________________________________________________________________________ ECONOMICS Paper 1 Additional Materials: Answer Paper 9757/01 14 September 2017 2 hour 15 minutes ____________________________________________________________________________ READ THESE INSTRUCTIONS FIRST Write your Centre number, 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. Answer all questions. At the end of the examination, fasten all your work securely together. Fasten your answers to each question SEPARATELY. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 3 blank pages. Pioneer Junior College Ministry of Education Blank Page

2 Pioneer Junior College 2017 9757 / 01 / PJC Prelimi nary Examination / 2017 [Turn over Answer all questions. Question 1 Pharmaceutical Industry and Healthcare Extract 1: Pharmaceutical industry gets high on fat profits Throw in widespread accusations of collusion and ov er-charging, and banking no doubt springs to mind. In fact, the industry described above is responsibl e for the development of medicines to save lives and alleviate suffering, not the generation of prof it for its own sake. Pharmaceutical companies have developed the vast majority of medicines known to humankind, but they have profited handsomely from doing so, and not always by legitimate means. Last year, US giant Pfizer, the world's largest dru g company by pharmaceutical revenue, made an eye-watering 42% profit margin. Five pharmaceutical companies also made a profit margin of 20% or more - Pfizer, Hoffmann-La Roche, AbbVie, GlaxoS mithKline (GSK) and Eli Lilly. Pfizer was also discussing a possible merger with Allergan, be st known for its Botox anti-wrinkle treatment. If the proposed merger goes through, the combination will be a monster among drug companies. As in other lines of business, such deals are a way to cut costs, gain market clout and achieve economies of scale. They also help firms expand to new markets. In pharmaceuticals the cost of developing new products is exceptionally high compa red with many other industries. So it is especially tempting for them to seek to extend their product range simply by buying another firm. Drug companies are also justifying the high prices they charge by arguing that their research and development (R&D) costs are huge. But drug companie s spend far more on marketing drugs to ensure demand than on developing them. They have al so been found guilty of mis-branding and wrongly promoting various drugs, and have been fined billions as a result. No wonder, then, that the World Health Organisation (WHO) has talked of the inherent conflict between the legitimate business goals of the drug c ompanies and the medical and social needs of the wider public. Indeed the Council of Europe is launching an investigation into protecting patients and public health against the undue influence of the pharmaceutical industry. No matter what the outcome of such investigations, however, the pharmaceutical industry is facing fundamental change, as the traditional model of dev eloping drugs breaks down due to rising costs and scientific advances. The cosy world of big pharmaceuticals is under threat like never before. Source: Adapted from BBC News , 6 November 2014 and The Economist , 29 October 2015 Extract 2: High Cost of Diabetes Drugs Often Goes Overlooked The problem of drug costs is expected to only get w orse as Americans get older and fatter. An estimated 29 million people in the US have diabetes and many of them will take diabetes drugs for the rest of their lives. Cost increases for both ol d and new drugs are forcing many to scramble to pay for them. For the fourth year in a row, per person spending on diabetes drugs in 2014 was higher than it was for any other class of traditional drug. "The cost of diabetes treatment has been increasing pretty rapidly," says Dr. Glen Stettin, senior vice presid ent for clinical, research and new solutions at Express Scripts, which manages the pharmacy benefits for many companies.

3 Pioneer Junior College 2017 9757 / 01 / PJC Prelimi nary Examination / 2017 [Turn over] Diabetes occurs when the body can't control the amount of sugar in the blood because of problems making or responding to the hormone insulin. High l evels of blood sugar can cause damage to the heart and blood vessels, nerves, kidneys, eyes and feet, among other things. About 90 percent of people who have diabetes have t ype 2 diabetes, which is linked to lifestyle factors such as obesity and inactivity. Type 1 diab etes, once called juvenile diabetes, commonly develops among children. Insulin was considered a wonder drug when it was di scovered in 1921. It remains a mainstay of treatment for millions of patients, and yet decades after its introduction there are still no generic forms of insulin available. The lack of generic ins ulin has hindered price competition for the key diabetes medicine. Source: Michelle Andrews, www.npr.org, 18 August 2015 Extract 3: Healthcare costs cause concern in Singapore Singaporeans are rank behind only Japan and Andorra in terms of leading the longest healthy lives in the world. But there are some worrying trends, s aid Health Minister Gan Kim Yong yesterday, including the ability to sustain the current level of service as the population ages. Costs are of particular concern. "Many developed countries with ageing populations a re facing similar challenges as us," he said. "One important lesson we can learn from their exper ience is that doing more of the same cannot be the solution." The Government has already more than doubled its he althcare spending from $4.7 billion in FY2012 to $11 billion this year. The launch of Medi Shield Life which is a healthcare insurance to cover everyone from birth till death last year has also helped people pay for their healthcare cost. But more needs to be done and he suggested three paradigm shifts: One of these deals with choosing appropriate care. Some insurance policies for private care provided by Integrated Shield plans pay according t o what doctors and hospitals charge. Some people also buy "riders" that do away with the need for the patient to pay anything for major medical treatment. These could lead to a "buffet sy ndrome" since the cost is paid by someone else, said Mr Gan. "This contributes to rising heal thcare costs for everyone and eventually pushes up premiums." This system will have to be studied, he said. Meanwhile, the ministry has set up an Agency for Ca re Effectiveness (Ace) to look into the use of high-cost treatments and technologies "to ensure th at the outcomes from these technologies are commensurate with these costs". Not all medical tes ts and treatments are necessary or useful, he said. Countries like the United States, Britain and Japan have launched "Choose Wisely" campaigns to educate people on low-value tests and treatments. This will help patients, caregivers and physicians make more informed treatment decisio ns and avoid over-provision of services that will drive up costs." The third push is to increase the years of healthy life for people here, which stood at 70.8 years for men and 73.4 years for women in 2013