Policy Documents

October 2006: Politicians on Drugs

Joseph Bast –
October 1, 2006

Ronald Reagan used to say politicians are like diapers: They need to be changed regularly, and for the same reason. Why would anyone trust politicians to choose which drugs are best for them?

Drug Politics

In 2003 and 2004, Democrats and their allies were pulling out all the stops in their effort to exploit public irritation over rising prescription drug prices. The Bush administration, they said, was standing between needy workers and seniors and an ample supply of prescription drugs in Canada and other countries that are nearly identical to drugs sold in the U.S. but cost just half as much.

On October 4, 2004, Illinois Congressman Rahm Emanuel (a former political advisor to President Bill Clinton) and Gov. Rod Blagojevich announced the launch of a state government-run prescription drug reimportation program called I-SaveRx. I was at the news conference. I heard the promises.

I-SaveRx was touted as the solution to high prescription drug prices. Illinois residents could go to the program’s Web site and order drugs from pharmacies in Canada and the United Kingdom. (Later, pharmacies in Australia and New Zealand were added.) According to Emanuel and Blagojevich, the state would inspect the foreign pharmacies to ensure they met or exceeded state standards for safety.

The governor claimed drugs could be bought for up to 50 percent less than their prices in the U.S. He predicted savings of $91 million a year just by getting the state’s public employees and retirees to sign up. Emanuel predicted other states would rush to sign up with I-SaveRx, and soon everyone would be enjoying safe and inexpensive drugs.

Broken Promises

In reality, I-SaveRx delivered none of the benefits its politician parents promised. You don’t have to take my word for it: Last month, the Illinois Auditor General released a detailed audit of I-SaveRx. It found:

 

  • For the most part, the foreign pharmacies were not inspected by the personnel at the Department of Financial and Professional Regulation (DFPR) who are legally required to conduct all inspections. Any inspections that did occur were apparently incomplete.

 

 

  • The DFPR did not monitor whether prescriptions were actually being filled by approved pharmacies, and the state didn’t even maintain an accurate list of approved pharmacies.

 

 

  • Only four other states joined I-SaveRx, and practically no one in those states used the service; for example, only 321 customers from Wisconsin and 217 from Vermont placed orders.

 

 

  • So few people used the service--4,954 individuals over the course of nearly two years, 3,689 of them from Illinois--that the state pulled the plug on the toll-free telephone line because there were so few calls.

 

 

  • More than $1 million was spent promoting and administering the service, with public workers from 28 agencies reporting time spent on the project.

 

The auditor general did not attempt to calculate the savings, if any, that the program generated for its few users.

Early Warnings

When Emanuel and Blagojevich first proposed I-SaveRx in 2003, the Food and Drug Administration (FDA) warned such a program would be an illegal violation of the national ban on importing prescription drugs. It also warned the program would be unsafe and fail to achieve significant savings.

In a remarkably blunt letter dated November 6, 2003, William K. Hubbard, then associate commissioner of the FDA, wrote, “It is inconceivable to FDA scientists that there will not be some injuries arising from the sale of unapproved drugs to your employees or citizens.” He warned of liability insurance costs that would consume whatever savings might otherwise be attained, and of wrongful death settlements that would cost Illinois taxpayers millions of dollars.

The Heartland Institute also was vocal in opposing I-SaveRx. We hosted a national symposium on drug importation in October 2003 featuring leading experts from across the country discussing the pros and cons of importation. All of the shortcomings revealed by the Illinois Auditor General were foreshadowed in the presentations made at that meeting. They can be read in What’s Wrong with Importing Drugs from Canada? the collection of essays we published a month later.

(The book is available on our Web site at http://www.heartland.org.)

What’s Wrong with Importing Drugs?

The ban on importing prescription drugs wasn’t something Republicans dreamed up to punish the poor and senior citizens. It has been the law since 1987. That law was enforced for eight years by none other than Bill Clinton, Rahm Emanuel’s former boss.

The ban remains in place for two reasons. The first is safety, to prevent counterfeit and adulterated drugs from entering the supply of drugs in the U.S. Counterfeit and adulterated pills and other forms of medicine can be detected and kept out of circulation only by maintaining a secure chain of custody from manufacturers to the point of sale.

If a “bad” batch of pills were to enter the U.S. illegally and be sold to wholesalers and then to hospitals and pharmacies, people would have to start becoming ill or dying before the problem would be discovered. The response--tracing the drugs to their sources and attempting to recall the medicine that may have been tainted--would be extremely costly. Remember the Tylenol tampering scare of 1982? Someone tampered with just seven or eight bottles of an over-the-counter pain reliever, resulting in the recall of 31 million bottles of medicine. Legalizing drug importation would lead to many such scares with far deadlier consequences.

Allowing drug reimportation would reward arbitrage--in this case, profiting from government-created price differences for identical or similar products--at the expense of research and development here in the U.S. The result would be less investment in discovering new drugs and bringing them to market, an outcome that would threaten jobs in the U.S. pharmaceutical industry and the health of everyone.

The second reason for the ban is economic, to prevent the reimportation of drugs manufactured or patented in the U.S. and sold in other countries. Drug prices are lower in other countries because of government-imposed price controls. Some libertarians support drug reimportation, believing it is a form of free trade. I disagree. Drug companies can’t resist foreign price controls because foreign governments threaten to give their patents to domestic companies that wouldn’t have to pay a cent for the research and development that made the drugs possible, enabling them to flood the market with cheap knock-offs.

A Difficult Message

It is difficult to persuade people that politicians offering cheap or even free drugs are not to be trusted. A Heartland donor, responding to a news release I wrote calling for the end of I-Save Rx, wrote, “I have to admit that I am tempted to sign up for the I-Save Rx program, much as I know it’s a political stunt. I take an asthma drug daily, and I have high-deductible insurance, so a 3-month supply costs me $680 ... but would cost only about $240 through the I-Save Rx program.”

I feel your pain, my friend. But you will be far better off shopping around for a better price or asking for a generic substitute (try Wal-Mart, which just announced it is cutting prices for many generic drugs, including some asthma medications).

Otherwise, you’ll be trusting politicians to make a life-or-death decision for you.


Joseph Bast (jbast@heartland.org) is president of The Heartland Institute.