Campaign for Drug Importation Falters

Published February 1, 2005

Importing safe and cheap prescription drugs would require a billion-dollar safety net that ultimately would consume most of the potential savings from importing drugs while draining drug research and development funds, according to a December 21 report of the U.S. Department of Health and Human Services (HHS).

“Overall national savings from legalized commercial importation will likely be a small percentage of total drug spending, and developing and implementing such a program would incur significant costs and require significant additional authorities,” the study concludes.

The current level of scientific research in the U.S. pharmaceutical industry, as described in the HHS report, depends on revenues from the sale of branded drugs. Cutting revenue from that source would cut resources available for research and development, resulting in between four and 18 fewer new drugs being brought to market per decade.

The HHS task force reiterated safety and economic concerns that have been well documented and often repeated during the pubic debate over drug importation. Nevertheless, it left ajar a back door to importation.

The HHS report confirmed that the Medicare Modernization Act of 2003 authorizes Congress to establish a system of certified drug wholesalers through which importation from Canada could take place. The act establishes tough requirements for such a program to meet, including restricting importation to only the highest-cost drugs.

In releasing the HHS report to the media, U.S. Surgeon General Richard Carmona, who chaired the task force, acknowledged it was up to Congress to make the final decision on importation. “If Congress is willing to consider importation from Canada, then it must be specifically regulated, much like FDA regulates the American movement of pharmaceuticals,” Carmona said.

Other Studies Confirm Findings

The HHS task force is not the first to spurn importation.

A Congressional Budget Office brief published in April 2004 concluded “that permitting the importation of foreign-distributed prescription drugs would produce at most a modest reduction in prescription drug spending in the United States.”

The brief continued, “H.R. 2427, for example, which would have permitted importation from a broad set of industrialized countries, was estimated to reduce total drug spending by $40 billion over 10 years, or by about 1 percent. Permitting importation only from Canada would produce a negligible reduction in drug spending.”

A second importation study, released on December 21 by the U.S. Department of Commerce (DOC), Pharmaceutical Price Controls in OECD Countries: Implications for U.S. Consumers, Pricing, Research and Development, and Innovation, reached conclusions similar to those found by the HHS task force.

Price-control practices, according to the DOC report, inhibit the development of generic drugs as well as of cutting-edge pharmaceuticals. Imported generics, for example, are 50 percent more expensive than the same drugs and dosages in the U.S. because generics in other countries do not face the same kind of competition from branded drugs as generics face in the U.S.

Opposition from Foreign Authorities

A month before the release of the HHS task force report, Canadian Health Minister Ujjal Dosanjh told a Harvard University audience his country cannot and will not be the drug store for America.

In Canada, limited importation into the U.S. already has caused drug supply shortages and price inflation, according to groups such as the Canadian Treatment Action Council and the Best Medicines Coalition, a group representing 10 million Canadian seniors, pharmacies, and patients.

It is not surprising then, that Canadian authorities have started to crack down on cross-border sales.

In December, Dosanjh welcomed plans by the Manitoba Pharmaceutical Association to take action against pharmacists who don’t follow provincial medical standards. According to a December 4 Canada NewsWire release, Dosanjh said, “the practice by some doctors of countersigning prescriptions without actually having a relationship with the patient and properly assessing the patient is absolutely unethical and unprofessional.”

Should importation be legalized, Dosanjh said his government “will do what is necessary” to ensure Canadians have access to medicines. (See “Canada Plans to Stop U.S. Drug Importation,” page 1.)

Canada is not alone in opposing greater U.S. drug imports. When the state of Illinois tried to set up a program that would import drugs from Ireland, the Irish Pharmaceutical Association called the Illinois program “a real surprise to us” and “totally unworkable and impractical.”

The Irish association expressed concern over the potential impact of the Illinois plan on Ireland’s prescription drug supply. The association’s spokesperson said the Illinois import plan “would cause enormous problems for us to meet our local obligations here.”

The End of the Campaign

The campaign to legalize drug importation has always been more about politics than actually solving a real public policy problem. With the 2004 elections past, the partisan energy that fueled the campaign is declining, and the facts showing importation would be a public health disaster continue to mount.

Instead of wasting legislators’ time and taxpayers’ money trying to buy cheaper drugs from other countries, we should be dealing with the reasons why our branded drugs are so expensive. This is a complicated issue that extends to excessive litigation, a cumbersome FDA approval process for new drugs, and fair trade issues. But real solutions often are more complicated than political slogans.

Conrad Meier ([email protected]) is a senior fellow with The Heartland Institute.