Published: February 14, 2007 10:10 am      

Drug reimportation looms

Now that Congress is back in session, members of the House and Senate are once again pushing to allow the reimportation of prescription drugs from Canada. Just days ago, Rep. Rahm Emanuel (D-IL) announced plans to introduce precisely such legislation – the Pharmaceutical Market Access and Drug Safety Act.

Democrats have long supported this form of drug piracy, and now that they hold both chambers of Congress, it stands a better chance than ever before – particularly because a large number of Republicans are on board. Jo Ann Emerson (R-MO) is a House co-sponsor. And Olympia Snowe (R-ME) is a sponsor in the Senate, along with Byron Dorgan (D-ND).

Unfortunately, despite the well-intentioned belief that legalizing reimportation would make drugs more affordable, these congressional leaders are likely to do far more harm than good. If reimportation were enacted, it would almost surely backfire. Critical life-enhancing drugs would become less available -- and more expensive -- for Canadians and Americans alike.

Many drugs in Canada are cheaper than in the U.S. Gross Domestic Product (GDP) per capita, for example, is one-fifth higher in America than in Canada. In fact, most everything is cheaper in Canada than it is in the U.S. because of the lower standard of living. Hence, drug makers have to “price to market.” They would do the same for low income Americans, too, except that the government has made it illegal to do so without special permission.

Because Canada is one-tenth the size of the U.S. market, selling to Canadians at a discount is more a nuisance than a deal-breaker.

But if piracy is legalized and U.S. pharmaceutical corporations see their drugs returning en masse to the U.S. at Canada’s below-market prices, they will respond by refusing to sell drugs to Canada altogether.

This is already happening. When more and more Americans started to use the Internet to illegally buy drugs from Canada, companies such as Pfizer, Lilly, and GlaxoSmithKline began limiting their Canadian shipments. Sadly, this meant fewer advanced drugs for Canadians.

Today, many Canadians travel south for life-enhancing drugs that are simply unavailable in Canada. Some are available in one province but not another. From 1999 to 2001, of the 100 drugs that came on the market in the U.S., only 43 were approved by a division of Health Canada.

If reimportation were actually implemented, and America tried to piggyback on Canada’s price law, it would create an unprecedented healthcare disaster not just in Canada, but in the United States, as well. Fewer life-saving cures would be invented, and cutting-edge medicine would become increasingly difficult to obtain.

American companies spend an average of $1 billion to develop a new drug. They must be able to recoup this investment, which is why the price of a drug is so much higher than the simple the cost of manufacturing a pill.

Politicians love to give away “free” stuff. But beyond the tax-subsidized fantasy world of Washington, D.C. — where real companies go belly-up everyday — it’s not possible to fill America’s medicine cabinets at below-market prices.

Think of the airlines and discount seats. If everyone were to fly in the heavily discounted seats, pretty soon there would be no seats available because the airline could not afford to fly.

The same is true in the drug industry. If politicians impose massive discounts on drugs, eventually the companies that invent those drugs will go out of business. Or they’ll stop developing new cures.

Further, drugs in Canada aren’t always even less expensive — generic drugs are dramatically cheaper in the United States than they are in Canada, and generics account for over half of all prescriptions filled.

That’s the truth about Canadian healthcare. The nation’s legislators should make a few calls to Canada and talk to people who are suffering from AIDS, Hepatitis C, or arthritis. Take it from me — a former Canadian — America doesn’t want Canada’s price-controls ... at any cost.