TAKING ADVANTAGE OF OTHERS' SUBSIDIES? Spoons Experience notes that prescription drugs are often expensive in the United States and cheap in other countries because the single-payer health care providers in other countries use a form of monopsony power (sell to us at the price we offer, or sell nothing at all) with the effect that U.S. consumers bear most of the burden of research and development (if the single-payer's price exceeds the avoidable cost of producing the drugs, taxpayers in other countries are kicking something in toward research and development.) Such price policies set up a short-term arbitrage opportunity (this Chicago Tribune editorial recognizes the point) to buy abroad at the controlled price and consume here, which has the effect of exacerbating the shortage of drugs abroad (it is no accident, comrades, that "socialism" comes just after "shortage" and just before "sophomoric" in the dictionary) albeit by reducing the revenues the drug producer expects to earn from the open-market (is it really an open market price with a constraint on overseas prices?) price. Insults Unpunished has been following the price-control and reimportation debate for some time, and the posts cited therein are worth a look.

In other health economics commentaries, Shark Blog notes, yet again, the deleterious effect of third-party payments on the incentive to shop for the best price, a phenomenon also present with guaranteed student loans.