New York Times Looks at Reimportation of Prescription Drugs
The New York Times on Saturday examined the debate over legalizing prescription drug reimportation from foreign nations and the related idea of imposing medication price controls in the United States. According to the Congressional Budget Office, 25 other industrialized countries have price controls that keep prices about 35% to 55% lower than in the U.S. for patented prescription drugs. It is difficult to compare the U.S. drug market with that of other countries because it represented more than half of the global drug industry's sales last year and is the country in which drug companies make most of their profits, the Times reports.
While it "may make political sense to point to Canada as a solution to high prescription drug prices in the United States ... many economists and health care experts say" that reimportation "would do little to solve the problem of expensive drugs in the United States, where companies are free to set their own prices," according to the Times. CBO, for instance, has said that allowing U.S. residents to purchase medicines from Canada would have a "negligible" impact on U.S. pharmaceutical spending, the Times reports.
The Times reports that many advocates and health experts who support reducing prescription drug prices advocate "Canadian-style price controls" rather than reimportation as a long-term solution. However, the issue is a "political nonstarter" and no lawmaker "will be likely to dare to propose such a thing during an election year, or perhaps anytime soon," according to the Times.
University of Connecticut economist John Vernon told members of Congress at a hearing in May that price controls would reduce pharmaceutical investment in research and development by 25% to 30%. But critics have said that estimate is exaggerated, asserting that pharmaceutical companies spend too much on "me too" medications and marketing new drugs, when older ones might have similar benefits.
Jean Lanjouw, an economist at the University of California-Berkeley, said, "Is it sensible for the United States to have price controls? It is a real question. But we don't discuss the real questions." Pfizer Chair and CEO Hank McKinnell said, "Reimportation is a false promise. If we want to import price controls, we should have that discussion. Let's have that debate."
However, Democratic presidential candidate Sen. John Kerry (Mass.) believes that prescription drug reimportation could be used to lower costs, the Times reports. "If the impact is so negligible, why are the drug companies fighting it so much?" Kerry's policy director Sarah Bianchi said. She added that even if small amounts of prescription drugs were reimported, "they would apply some pressure on the drug industry and make them revisit their pricing policies" (Porter, New York Times, 10/16).