This has nothing in particular to do with patent remedies, but in a story on President Trump's speech today about lowering drug prices, the New York Times reports that "In trade negotiations, the White House wants to put pressure on other countries to increase the prices of brand-name drugs, with the expectation that pharmaceutical companies would then lower prices here at home." I've heard this sort of argument made many times over the years, and I've never understood it. To be sure, one might argue, whether accurately or not, that other countries where governments control drug prices in one manner or another aren't paying their fair share for the R&D that goes into developing new drugs. But if we assume that drug companies are rational economic actors, why would their ability to earn more revenue abroad impel them to lower domestic drug prices? Standard economic theory predicts that firms, at least as a first approximation, charge what they believe to be the profit-maximizing price for their goods. So if drug companies are, more or less, charging what the market will bear in the United States--maximizing their profits--why would anyone expect them to stop doing so, and voluntarily charge lower prices, just because they start earning more revenue abroad?
I largely buy into the insights of behavioral law and economics that people aren't always the rational economic calculators that old-school economics assumes them to be, but even so . . .