Legalization of Prescription Drug Reimportation Would Not Reduce U.S. Spending, CBO Brief Finds
Allowing the reimportation of lower-cost, U.S.-made prescription drugs from other nations "would have little impact" on drug spending in the United States, according to an issue brief released Thursday by the Congressional Budget Office, CongressDaily reports. According to the brief, prescription drug prices in other industrialized nations are about "35% to 55% lower than in the United States." However, the CBO brief found that even if reimportation were legalized, the "intricacies of the worldwide prescription drug market would likely limit the amount of drugs that would reach the United States," CongressDaily reports. The brief said that the enactment of HR 2427 -- a bill passed by the House last summer allowing the reimportation of lower-cost, U.S.-made prescription drugs from 25 industrialized nations -- would reduce U.S. drug spending only by "about 1%." Allowing reimportation only from Canada "would produce a negligible reduction in drug spending," the CBO analysis found. "Many foreign governments already intervene in the patented drug market by regulating prices, and some might act to limit exports to avoid shortages," the CBO brief said. In addition, the CBO brief said that pharmaceutical companies could restrict shipments to other nations, which some drug companies are already doing to Canadian wholesalers that sell treatments to U.S. residents. The brief also found that U.S. consumers would not realize the full price difference of foreign prescription drugs because a "portion of any given price difference would accrue to wholesalers and other intermediaries facilitating the domestic sale of drugs diverted from foreign markets." Some of the price difference would go toward the costs of meeting new packaging and labeling requirements, while some of the price difference would go toward profit, the CBO analysis found. In addition, the brief said that potential savings would be reduced by the "likely refusal of drug makers to indemnify intermediaries against damages associated with the safety and integrity of products shipped to other markets," resulting in added liability insurance costs for reimporters, "which would be passed on to consumers." Beginning last summer, CBO officials have said that reimportation would not reduce U.S. drug costs, but the new issue brief includes "the most substantial explanation of the agency's reasoning thus far," according to CongressDaily (Rovner, CongressDaily, 4/30). The CBO brief is available online. Note: You must have Adobe Acrobat Reader to view the brief.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.