Question

2. A vitamin company, Pro Health (PH), was preparing to launch a new product called ProBio. It had produced 20,000 units of ProBio at a cost of $5 per unit and had packaged the product in bottles with labels that prominently displayed the ProBio name. At the last minute, PH learned that an established drug company already sells a product named ProBio. FDA regulations prohibit drugs with identical names from being sold on the market, with the penalty for noncompliance being full product recall. Rather than face product recall, PH decided to comply with the regulation voluntarily. As a result, the product had to be renamed and rebranded, the label had to be redesigned, and a new advertising campaign had to be formulated and launched. What were the likely outcomes of this decision? What might have happened if the company had not voluntarily changed its product?

Answer 1

The company would be sued and would face a fine

Answer 2

Answer:

The result of the company's decision to change the name of the ProBio product to another name is that the costs per unit produced will be greater than $5 per unit.

If it had not changed its decision, it would have to face a fine and withdrawal of the product by the FDA and a lawsuit for the possible damages caused to the other company that has a product with the same name.

Explanation:

When there is an unexpected legal impediment, the company decides to change the name of the product so this one that has a cost of $5 per When there is an unexpected legal impediment, the company decides to change the name of the product so this one that has a cost of $5 per unit is going to have a much higher cost than originally calculated.  This is because you will have to pay a designer or a marketing company to establish the new name of the product, which will generate expenses in the new advertising and product launch.

If it had not changed its decision, it would have to face a fine and withdrawal of the product by the FDA and a lawsuit for the possible damages caused to the other company that has a product with the same name.  This generates a greater loss than the option of changing the name because it is not only an economic cost but also a cost in the image of the company that can cause a deterioration in the confidence of its customers, causing sales to fall.