Prescription Drug Re-Importation No Cure for American Health Care

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Senator Kerry frequently proposes to make lawful the re-importation into America of prescription drugs from countries such as Canada where retail prices are lower. President Bush has said that he will sign a re-importation bill if it crosses his desk.


Many in Congress also have latched onto the idea of re-importing prescription drugs.


Surely, the argument goes, American consumers could benefit from the lower prices for prescription drugs in other countries. That is a mistake for several reasons.


Many proposed re-importation plans would violate provisions of the Food and Drug Act which governs the Food and Drug Administration. Ordinarily, the FDA carefully reviews imported pharmaceuticals. That review would be compressed or eliminated under some re-importation plans.


We might as well close much of the FDA with many drug re-importation plans, and delegate the responsibility for American public safety and pharmaceuticals to Ottawa, Paris, or other capitals. Closing the FDA appeals to many with a libertarian bent, but it is an ironic outcome for a proposal from Senator Kerry.


Many drug re-importation plans could reduce the value of existing American patents and other intellectual property associated with pharmaceuticals while increasing the value of corresponding patents and intellectual property held in other countries.


In much of the world drugs are purchased and their prices controlled by government agencies, rather than by competitive markets. An American pharmaceutical company that refuses to sell at the price requested by a foreign government agency runs the risk of having that government issue a “compulsory license” to another company to manufacture the product.


The American firm usually caves in to the foreign government and agrees to a lower price that may cover the incremental costs of manufacturing, but not the fixed costs of research and development. Those costs are often borne, unfairly, by the American consumer.


Under some proposed re-importation plans, the cost of research and development of many existing drugs would ultimately be borne by no one. That may be a pleasant outcome for users of current drugs, but not for potential users of future drugs, which would be less likely to be developed.


Drug prices in America rise and fall with demand and supply. In most other countries, they rise and fall by government fiat. It is dangerous for us to adopt laws to address price differences with other countries that are the result of their price regulation. Governments that regulate pharmaceutical prices could set them not only for their own domestic purposes but for purposes of exploiting our markets as well.


Nor should we have a policy that reacts to lower prices in other countries. In much of the world, piracy of intellectual property is the norm rather than the exception.


Pirated copies of Microsoft software or Warner Brothers movies are practically free in much of the world. It does not follow that they should be imported into America simply because we could then purchase them at a lower price.


The choice is not between free trade and intellectual property protection. Both are important for economic prosperity, and both must be based on the predictable rule of law for either to have value. Drug re-importation proposals appear wanting in both areas.


Much is lacking in our health care sector. Medical malpractice costs have skyrocketed due to junk lawsuits, driving up costs of physicians’ visits, vaccines, and pharmaceuticals. President Bush has proposed legal reform to deal with this problem, whereas Senators Kerry and Edwards, with the support of trial lawyers, take a different view.


Also, with each passing year, government intervention increases, and the efficiency of the health care system declines. Yet ours remains one of the least government-controlled systems in the world, and one of the best in terms of widely available technology and results.


Foreigners who seek a high standard of care come to the United States, but rarely vice versa. It is naive to think that we can import one country’s pharmaceutical prices without importing the ills of their health care system.


Many other countries have lower pharmaceutical prices in part because their governments meddle more than ours. But that is not the right prescription for America.



Mr. Furchtgott-Roth is a former commissioner of the Federal Communications Commission. He can be reached at hfr@furchtgott-roth.com.


The New York Sun

© 2024 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

or
By continuing you agree to our Privacy Policy and Terms of Use