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One of the motives for a government to impose a tax is to enable producers to compete with overseas trade, thus protecting the home industry. The US pays the most for prescription medicine, due to a large transfer of wealth. Pharmaceutical products are cheaper abroad because companies know they can make money in the US market. Countries in Europe are tougher negotiators which allows them to have low priced pharmaceutical products. The subsidies for health-care in the US are relatively ineffective because Deadweight (welfare) loss is occurring as the total cost of the subsidy outweighs the increase in total consumer and producer welfare, within the country.

Hi Ronald Do you think the imposition of this tax is overall effective?