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Drug Import Bill Bad for America’s Health

Originally Published in The Cumberland Times-News

By Christopher B. Summers
Published on Saturday, August 30, 2003
OP-EDS

Congressional lawmakers will soon vote on legislation to allow Americans to purchase prescription drugs from pharmacies in Canada and other countries where prices are much lower. This “re-importation” seems like a good idea, especially for seniors who are anxious to lower their prescription drug bills. But the legislation raises two important questions that lawmakers need to address: How can the safety of re-imported drugs be assured, and how can the U.S. bring lower drug prices to its own pharmacies?

The prescription drugs purchased from U.S. pharmacies are safe, effective and of very high quality. Drugs from Canada, Mexico and Europe may be cheaper, but are they as safe and are their origins as well known? According to the federal Department of Health and Human Services, “A growing number of Americans are obtaining their prescription medications from foreign sources and when they do so, consumers are exposing themselves to a number of safety risks that must not be ignored. In the Food and Drug Administration’s experience, many drugs obtained from foreign sources that either purport to be or appear to be the same as U.S.-approved prescription drugs are, in fact, of unknown quality.”

That concern is shared by the American Medical Association. At a recent meeting, the AMA delegates voted against a resolution supporting re-importation, because of concern that “the FDA could not ensure the integrity and safety of products imported from Canada or other foreign countries.” According to the delegates, “the break in the chain in regulatory control makes patient harm a real possibility.”

 Not only is there reason to worry that drug re-importation could expose U.S. consumers to unsafe prescription drugs, it also could severely slow the development of new medical breakthroughs. Pharmaceuticals are cheaper in Canada and other countries because they are purchased and distributed by government-controlled socialized health care systems. Hence, those governments can dictate prices, and they do so at levels far below what drug firms need to recover their immense research costs. However, because the companies would rather receive a little money than none at all, they sell their drugs to foreign countries at the discounted rates and then they raise their prices to U.S. consumers in order to recover the research costs.

Instead of addressing the unfairness of Canada and other wealthy nations pushing the world’s drug research costs onto the shoulders of U.S. consumers, congressional lawmakers want Americans to latch on to those nations’ socialized medicine systems. The lawmakers need to keep in mind a basic economic truth that both theory and experience have proved: Price controls do not work because they increase demand, stifle supply and ultimately lead to rationing. In fact, they invariably worsen any problem they attempt to solve.
 
History is littered with examples of price-control failures. The gas lines of the 1970s appeared when the federal government adopted a failed price-control policy. More recently, the blackouts in California of 2000-2001 resulted when Gov. Gray Davis refused to alter that state’s rigid consumer price controls. By leaving those controls in place, Davis allowed demand to grow unchecked and enabled government-owned utilities and energy corporations to game the California electricity market.

The U.S. pharmaceutical industry is the most innovative and productive in the world, and it provides consumers with the best and safest medicines available. That is why American drug companies are so far ahead of their foreign counterparts in making medical breakthroughs and formulating miracle drugs. But drug research is a very costly, complex and time-consuming process. Each new drug represents some $800 million in research and 12 to 15 years of study.

Drug maker Eli Lilly alone spent $2.2 billion in 2001 on the quest to discover and develop innovative medicines. In addition, the firm’s “Lilly Cares” program that provides drugs to low-income and uninsured patients assisted approximately 200,000 people in 2001, fulfilling more than 375,000 requests for products valued collectively at over $200 million. That is just one of the programs that Lilly and other pharmaceutical companies have that provides discounted medicines to low-income U.S. seniors and people with disabilities.

The conclusion is painfully clear: Legislation to import unsafe prescription drugs through another country’s socialized medicine system will not provide a true cure to the high cost of drugs in the U.S. Rather, such legislation would be a sugar pill, a placebo, a deceiver. And as such, it would be dangerous or even deadly to consumers.

- Christopher B. Summers is president of the Maryland Public Policy Institute (www.mdpolicy.org).