Scenario B: A vitamin company, Pro Health (PH), was preparing to launch a new product called “ProBio.” It produced 20,000 units of ProBio at a cost of $5 per unit and packaged the product in bottles with labels that prominently displayed the ProBio name. At the last minute, PH learned that an established drug company was already selling a product named ProBio. FDA regulations prohibit drugs with identical names from being sold on the market, with the penalty for noncompliance being a full product recall. Rather than face product recall and all the attendant costs, 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, remanufactured, and reapplied; and a new advertising campaign had to be formulated and launched.
1. How does this FDA regulation protect consumers?
2. Why did the company voluntarily change its product name?
3. What effect did this regulation have on the company and on consumers?