Subject: Re: mandatory patent auctions
From: Seth Gordon <sethg@ropine.com>
Date: Fri, 06 Oct 2006 11:32:35 -0400

[KAnderson@dentrix.com:]
> I don't really mind so much that drug prices are low in the Sudan.
> 
> Replace "subequitorial Africa" with "Canada" or "France", and I think
> your argument is less sound. And you know drugs are less expensive in
> Canada because people are driving across the border to buy them!

Cf. the second footnote in Stephen's message:
> [2]  The crucial assumption is that the monopolist is allowed to
> maximize profit.  If the monopolist faces price regulation in either or
> both regions, then almost anything can happen depending on the details
> of regulation.

Canada, like almost every other OECD country, imposes price controls on
drugs.

Note, too, that any wealthy country with some kind of socialized
medicine can, on the one hand, grant monopoly rights in the form of a
patent to drug companies, but on the other hand, use its health
authority's monopsony power to bargain down the price of the actual
medicines (even if they don't set prices that patients would pay outside
the national health system).  The state giveth and the state taketh away.