Really interesting piece in Marginal Revolution.
Even though antibiotics are lifesaving, they do not command a premium price in the marketplace. As a society we seem willing to pay $100,000 or more for cancer drugs that cure no one and at best add weeks or a few months to life. We are willing to pay tens of thousands of dollars for knee surgery that, at best, improves function but is not lifesaving. So why won’t we pay $10,000 for a lifesaving antibiotic? – See more at: http://marginalrevolution.com/#sthash.RrQYexB7.dpuf
Tyler Cowen at Marginal Revolution provides a link to the paper.