11/19/03 12:00AM By John McClaughry
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(Host) As debate continues over the reimportation of prescription drugs from Canada, commentator John McClaughry suggests that there may be a better way to address the problem.
(McClaughry) Pressure is building to allow the importation of pharmaceutical products from foreign countries, notably Canada. For America's world-leading pharmaceutical industry, this is a life or death issue.
The American pharmaceutical industry surveys thousands of compounds to identify those that have promise for treating various illnesses. The most promising go into three phases of Food and Drug Administration trials. Finally, if the new drug proves safe and effective, it wins FDA approval.
At this point the company has invested up to eleven years and over 800 million dollars. Every prescription bill sold in America carries a little bit of that 800 million dollar cost. In countries where price controls are in force, patients pay almost nothing toward those enormous costs.
In Canada, provincial drug approval boards fix prices for prescription drugs. These prices are usually just above the cost of making and distributing the pills. The U.S. companies can make pocket change selling at these government-controlled prices, but the Canadian patients pay almost nothing toward the enormous cost of developing a new drug. U.S. patients and taxpayers are paying those costs. To put it bluntly, Canadian and other foreign patients are parasites on American patients.
Reimporting these underpriced drugs back into the U.S. from Canada means an equivalent amount of the same drugs will not be sold here at U.S. prices. The more widespread this practice is, the less able the U.S. companies are to maintain their R&D efforts. If they keep on shipping $1 pills to Canada to watch them come back as twenty-cent pills in the U.S., the industry is finished.
That's always the baneful effect of price controls. Instead of trying to impose price controls directly in this country, where the effects would be more obvious, the reimportation politicians want to let Canadian provincial governments do the dirty work, after which we import the results.
Instead of importing price controls, Congress ought to reduce the enormous costs of pushing a new drug through to FDA approval. It should return to the rule prior to 1962. Manufacturers would have to prove only that their drugs were safe. They would not have to prove they were effective, which is what eats up the hundreds of millions of dollars. Patients and doctors will discover quickly enough whether a drug delivers on its promise.
Reimportation, today's hot "solution", is a disaster in the making. It will end up costing American patients and taxpayers dearly in extended hospital time and reduced quality of life.
This is John McClaughry - thanks for listening.