well, yes and no. Your general analysis is correct, but it also depends on what is called "elasticity of demand". The point is, if demand is "inelastic", that is, if it doesn't change much when prices change, you wouldn't expect much of a change in the equilibrium price. And here is where the problem comes, medications (as any first need good) usually have an inelastic demand, you need to consume it in order to survive, no matter what. So you stop consuming other things with a much more elastic demand (thing you don't really need to survive but are nice to have) in order to have the money to buy these things you really need. At the end, you'll have less money to buy other things ("income effect"), lowering the demand for goods with a more elastic demand, but you'll keep consuming pretty much the same amount of the inelastic demand good (i.e. medications you need in order to survive).

Does this make sense? I hope so...

good stuff claudia. a few technical points. i clearly conflated the economics of medicine for seriously ill patients and the economics of medicine for cheating bike racers. and for that i apologize. your comment is right on.

to digress briefly, and further conflate medicine and economics, many seriously ill people treat the referenced side effects as an externality which is not factored into the calculus of treatment decisions. this is unfortunate, but unavoidable given the power of the medicine and the incomplete understanding of it's full modes of action.

an interesting paper on american household defecit spending came across my desk recently:
http://www.levy.org/default.asp?view=publications_view&pubID=10f39af200b

from the paper:
"Contemporary economists are trained to view household spending decisions as the aggregation of millions of individual budgeting decisions based on intertemporal utility calculations; these calculations, by definition, must produce rational consumption paths over time. The dramatic deepening of household deficit spending—the gap between household income and expenditures or, alternatively, household saving minus investment—suggests that this view of household spending decisions may be a bit too complacent."

picking up on this and changing course, i would offer that even for the informed cyclist who considers spending money on performance enhancing drugs, their decisions are made with a relative paucity of good information. this lack of good information prevents the customer from being able to optimize their consumption in ways we would consider rational. i believe that in these instances, there is a perceived return on investment that is not tangible, and hence the consumer perceives a false future value to their current asset allocation.

now under a proper state administered sport system, all cyclists who truly show promise, can and do get the drugs they need to perform up to specification and bring pride to the homeland. it's something we shoul all aspire towards...