Chip Taylor

Drug reimportation

If Canada (or any other country for that matter) had a pharmaceutical industry that produced prescription drugs that were just as safe and efficacious as, but less expensive than, those produced in the U.S. it would make sense to import them. For the most part, that's what we do with items like shoes, t-shirts, electronic goods, and the like. At least, that's what we do when Washington isn't succumbing to its protectionist tendencies.

But Canada doesn't have a more efficient pharmaceutical industry than we do. The Canadian government forces American pharma companies to submit to price controls in return for having their drug patents honored. By importing Canadian drugs, we wouldn't be importing something produced more cheaply elsewhere; we would merely be outsourcing the imposition of price controls.

What we need is an open and above board debate about price controls. But we can't have one. Supporters can't win the argument on the merits and we have enough of a free market tradition that it is a hard sell in any case. On the other hand, opponents of price controls avoid the debate from reluctance to be cast as shills for big pharma. So, rather than having that debate, we have one over the reimportation issue.

The administration hasn't wanted to talk much about the economics of reimportation. Instead, like other opponents, it has focused on "safety." Now, it turns out that the administration says we can do reimportation safely, but the safety measures and other overhead will eat up most of the "savings" of reimportation.

The Bush administration said Tuesday that commercial importation of some low-cost prescription drugs from Canada might be feasible. But the savings to consumers would be small, it said, and the federal government would have to spend hundreds of million dollars a year to ensure the drugs' safety.

The administration said in a report to Congress that legalizing imports would probably hurt the development of new drugs for Americans.

The report was released amid growing support for laws on importing drugs. Republican proponents include Senators Olympia J. Snowe of Maine, John McCain of Arizona and Trent Lott of Mississippi; Gov. Tim Pawlenty of Minnesota; and Representative Jo Ann Emerson of Missouri, as well as several newly elected members of Congress.

Sponsors of bills to legalize drug imports said they would keep pushing for it in the new Congress.

"I never had much confidence that this study was going to be objective," said the sponsor of one bill, Senator Byron L. Dorgan, Democrat of North Dakota.

Ms. Snowe said the administration had "failed to provide any meaningful recommendations" to Congress.

The conclusions of the report are generally consistent with studies by the drug industry, the Food and Drug Administration, and the Congressional Budget Office. Many economists and health care experts say importing drugs from countries that control their prices would do little to solve the problem of expensive drugs here.

Reimportation as a means of lowering drug prices is about as effective as propping open your refrigerator door as a means of cooling your kitchen.

An earlier article lays out the issue quite nicely.

A copy of the report and other task force info can be found at the DHHS task force website.