BioGeological Pharmaceuticals invested $100 million on a heart drug that does not prevent heart disease. BioGeological has since found that the drug does prevent diabetes. When considering whether to market the drug as a diabetic panacea, the company should consider the $100 million spent while investigating the heart-related effects.

Question

Quizplus · Accepted Answer

The $100 million spent is a sunk cost and should not influence the decision to market the drug for diabetes. The decision should be based on future costs and benefits related to the new use.

BioGeological Pharmaceuticals Invested $100 Million on a Heart Drug That