Experts Say Importation Plan Would Reduce Innovation

Published December 21, 2006

(Chicago, Illinois – December 21, 2006) This morning, Rep. Rahm Emanuel (D-IL) held a news conference in Chicago announcing his intentions to push, along with Senators Snowe, Dorgan, and Emerson, the Pharmaceutical Market Access and Drug Safety Act during the next Congress. The bill would allow consumers to purchase prescription drugs from other countries in order to take advantage of the price controls those countries impose.

The following quotes were acquired by The Heartland Institute from free-market health policy experts around the country. You are welcome to quote from the statements below or contact these experts directly.

Devon Herrick, Senior Fellow, National Center for Policy Research
972/308-6470 – [email protected]

“Global drug competition involves numerous international firms competing for consumers’ business. This is markedly different from drug reimportation, which does nothing more than import back into the U.S. the price controls other countries have imposed on drugs that originated here in the first place.

“Economists have long agreed price controls inhibit innovation. Drug development is based on a risk/reward ratio: Take away some of the rewards and drug makers will compensate by taking fewer risks.”

John R. Graham, Director of Health Care Studies, Pacific Research Institute
415/955-6104 – [email protected]

“The proper name for this is drug piracy, not importation. Rep. Emanuel would not propose legislation to ‘import’ Hollywood movies from China, or Silicon Valley software from India. This bill demonstrates inexcusable ignorance of the evidence that lower drug prices come from less government interference, not more.”

Peter J. Pitts, Director, Center for Medicine in the Public Interest
917/279-0938 – [email protected]

“If this bill passes twenty-first century pharmaceutical research and redevelopment would likely grind to a halt for lack of dollars to fund it.

“Just yesterday the Government Accountability Office reported that annual research and development spending by the pharmaceutical industry increased 147 percent, to $60 billion, between 1993 and 2004. At the same time, the number of new drug applications to the Food and Drug Administration grew by only 38 percent. About two-thirds of the new applications were for drugs that represent modifications to existing medicines, while 32 percent were for potentially innovative new drugs.

“Are you willing to trade tomorrow’s new cures and treatments for ‘world prices’ today?”

Joseph L. Bast, President, The Heartland Institute 312/377-4000 – [email protected]

“It’s incredible to me that elected officials are willing to put politics ahead of the public’s health and safety. Foreign drugs are cheaper than drugs here in the U.S. because they are less safe and because foreign governments violate the rights of patent-owners. Why would we want to rely on such an obviously wrong approach to providing safe and affordable drugs?”

Roger Pilon, Ph.D., J.D., Director, Center for Constitutional Studies, Cato Institute
202/789-5233 – [email protected]

“As one who has argued in the past for lifting the statutory ban on importing prescription drugs so the market can set prices, I give my qualified support for this proposal. I would want to see the details, however, because the last such proposal Senators Dorgan and Snowe put forward was anything but a market-friendly bill. It would have compelled drug companies to continue selling drugs at controlled, sometimes below-cost prices abroad and then forbidden them from taking any self-help measures to prevent those drugs from coming back into this country. In short, it would have amounted to importing foreign price controls––controls Congress is understandably reluctant to impose directly. That in turn would mark the beginning of the end of the miracle drugs that companies have produced in recent years.” (For more on this issue, see

Grace Marie-Turner, President, The Galen Institute 703/299-8900 – [email protected]

“There is no such thing as a world market price. The genius of markets is allowing differential pricing so people and countries with different income levels can afford products and services.

“Imagine if we tried to set a world market price for housing, or cars, or hospital stays, or anything else. Some people would get a good deal but others in less-affluent countries would be completely shut out of the market.

“Right now, pharmaceutical companies have very low prices for their products in very poor countries––even giving their drugs away––so people can have access to them. Do Americans want to save a few dollars on drugs at the expense of millions of people in poorer countries who wouldn’t be able to afford the drugs at all? “And if the prices were set too low––as they surely would be––it would dry up the research dollars for new medicines so that the research-based pharmaceutical industry would basically be put out of business. This would mean no new treatments or cures for Parkinson’s, Alzheimer’s, and even cancer.

“Some say government would pick up the slack. Not true. Only about 3 percent of drugs brought to market have significant involvement by government researchers.”