Current Events — HabitableZone

Current Events » in reply to Lemme see if I get this...

Nope
Larry J — (archived)

Consumers often choose to save money by "outsourcing" (buying imports). Wal Mart would likely close if we somehow stopped trade with China. Look around and see how many foreign cars are on the road. The consumers effectively outsourced the purchases.

Medicine is a tough problem. American drug companies produce the vast majority of all new medicines. The R&D costs for producing a single new drug can easily exceed half a billion dollars. Like any other company, drug companies need to recoup those R&D costs in addition to covering their production costs. However, the US is perhaps the only major industrial nation that doesn't put price controls on medicine. As a result, countries like Canada can and do put price caps on the drugs that may be enough to make a profit on the production costs but not enough to recoup the R&D costs. Guess who is left to pick up the R&D costs?

So, what do you think will happen if large numbers of American consumers import those drugs from countries like Canada? If companies can't recoup their R&D, then they won't invest in R&D, meaning the supply of new drugs will slow to a trickle. This is a huge problem given that many types of bacteria have become resistant to existing antibiotics and new diseases like SARS and West Nile are becoming serious health issues. I would expect that most American drug companies would limit their exports to other countries, which could lead to shortages the same as any other form of price controls.

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