TOLFA Segment 13, Question 3

If government management of health care raises prices, how come prescription drugs are so much less expensive in Canada than in the United States? Obviously the claim here is false; government does not necessarily raise costs. Its buying power keeps drug costs low. It should be implemented in the US also, before the poor die of high prices.
The Canadian and other governments dictate maximum prices for drugs and the manufacturer then chooses whether or not to do business there. If not, residents don't get his drug. He will do so, rationally, only if he can make some extra, marginal profit. However if such controls were imposed even in the US - the main market - he would be unable to give his shareholders a competitive return and would go out of business, setting medicine back for decades.
American drug buyers are subsidizing Canadian patients. That's immoral.
If government went out of business, the cost of pharmaceutical drugs would tumble for the reasons shown in this Segment. The question is irrelevant.

Don't hurry away; even when you've got the right answer, try clicking on the others to see why they are wrong! Then when you have correctly answered this make notes in your student notebook, go to Question 4.

Segment 13 Page