If you'd like to see how thoroughly a drug market can be screwed up, have a look at Greece. They're leading the way here as well:
Ten years after entering the eurozone, Greece is faced with the herculean challenge of persuading pharmaceutical companies to strike a bargain and lower the cost of the medicines they sell in the country. At present, there are fears of drug shortages in certain hospitals as a result of unpaid bills. . .During the last two decades Greece became a paradise for branded-drug producers, with generic medicines constituting only 12% of the drugs consumed in the country. Between 1997 and 2007, the amount of health spending per Greek citizen grew annually by 6.6%, bringing the country to fourth place worldwide, after South Korea, Turkey and Ireland, in terms of this growth.
The crisis comes, in part, as a result of the Greek National Health System racking up debts by treating pensioners and poorer locals with expensive branded drugs instead of generics. The government paid the pharmaceuticals mostly with state bonds that lost substantial value in the fiscal crisis, and, in response, they started turning off the faucet. . .
But there's another factor at work, too:
For many months, pharmacies have been reporting shortages of medicines as some distributors have reexported comparatively cheap drugs from Greece over to Germany and other European markets, achieving monetary gains of as much as 600%.
Yep, Greece has simultaneously managed to pay too much for pharmaceuticals and provide a lucrative opportunity to export cheap ones. If economics worked like electrical engineering, there would be huge sparks jumping across these gaps and things would be shorting out all over the place. Actually, that's pretty much what's happening as it is.