News Advisory: Governor's Estimate of Savings from Drug Importation Is 'Pure Fiction,' Think Tank Says

October 28, 2003
Joseph L. Bast



CHICAGO, 1:30 p.m. CST: Governor Blagojevich's Office of the Special Advocate for Prescription Drugs released a study on October 26 claiming the State of Illinois could save $90 million a year by importing drugs from Canada for state employees and retirees. Joseph Bast, president of The Heartland Institute and publisher of Health Care News, released the following statement:

The $90 million figure is pure fiction. Even the authors of the study admit the savings are likely to be only a third as much. Using more realistic assumptions, the program would save nothing or impose a substantial cost on the state's taxpayers and consumers.

The Governor's task force assumes every state employee and retiree will order all the drugs they need (that appear on a list approved for importation) from Canada. That simply won't happen. The authors of the study admit a 33 percent participation rate might be more realistic, reducing the savings to $30 million, but even that is much too high.

The actual savings could be zero or negative because claims that importation would save money rest on five assumptions, all of them wrong: (1) drug companies would not reduce the discounts they already give to the state's prescription benefit manager; (2) there would be no increase in the price of drugs from Canada; (3) there would be no increase in security costs; (4) there would be no increase in utilization by state employees and retirees; and (5) there would be no reduction in supplemental rebates drug companies voluntarily pay to the state's Department of Public Aid.

All five of these assumptions are probably wrong. Any one of these responses to importing drugs from Canada would cancel out all the projected savings.


For additional information from The Heartland Institute on drug reimportation or other health care issues, contact The Heartland Institute at 312/377-4000 or visit its Web site at http://www.heartland.org.

The Heartland Institute is a 19-year-old nonprofit research organization headquartered in Chicago, Illinois. It has addressed health care issues since 1993 and on October 23 hosted a National Symposium on Drug Importation featuring public policy experts, business leaders, and state elected officials. Nothing in this news advisory should be interpreted as necessarily reflecting the views of The Heartland Institute or as intended to influence pending legislation.