Federal Ban on Prescription Drug Reimportation ‘Unsustainable,’ Cato Institute Report Finds

A Cato Institute report released Wednesday states that legalizing the reimportation of drugs from other nations would "let the global marketplace sort out imbalances" in drug costs and force other countries to share the burden of funding new medical research, the Washington Post reports. The Cato report -- which represents a "direct conflict with [Cato's] allies in the Bush administration" -- notes that it is politically and economically "unsustainable" for federal regulators to control reimportation, according to the Post.

In the report, Roger Pilon, Cato's vice president for legal affairs, states that drug makers need to earn large profits to guarantee investments in new treatments. However, Pilon adds that the drug industry should stop relying on the reimportation ban for profits and start negotiating higher prices with foreign customers. In the 20-page report, Pilon writes, "Removing the reimportation ban should not be seen ... as tantamount to reimporting foreign price controls." According to the report, legal reimportation would require companies to "shift some of the true costs of modern medicines" to what Pilon calls "free rider" countries that pay low costs for drugs without having to invest in new research.

The report noted that, with two million U.S. residents importing drugs illegally and a "diverse array" of lawmakers who support of lifting the reimportation ban, the current restrictions could present a political challenge to President Bush, the Post reports. "Senior citizens are a big voting bloc and a growing voting bloc," Pilon wrote, adding, "This is an issue of great concern to them." Russell Roberts, an economist at George Mason University, said that Pilon's plan would give U.S. residents "a better deal" but added that "it won't be so much in lower prices. It allows Americans to share the burden of future drug discoveries with a wider pool of payers" (Connolly, Washington Post, 8/4). The report is available online. Note: You must have Adobe Acrobat Reader to view this document.