National Symposium on Drug Importation: Small Gains, Enormous Risks

Published November 21, 2003

The focus on finding ways to reduce spending on prescription drugs has turned attention away from some important facts. One fact is that spending on drugs is actually a very good investment. For every dollar that you spend on new drugs, according to a study by Frank Lichtenberg, an economist at Columbia University’s business school, you save $6 in other medical expenditures in treating that disease. (1) So spending more on prescription drugs is actually a very wise investment.

A second fact is new medicines yield better results than older medicines. Newer and better drugs just don’t get launched as early in Canada as they do here. Fusion, which is a new drug for AIDS, just got approved in Canada a couple of days ago. It was approved here in the year 2001. The new drug we heard a lot about to reduce the repeat odds of breast cancer, Femara, was approved in the United States, I think, in 1998. It was approved in Canada in 2001, and so it goes. So as far as importation is concerned, you’re always going to be importing older drugs all the time, if at all.

Problems with Cheap Drugs

According to the principal proponents of importation, Joanne Emerson and your local congressman, Rahm Emanuel, if we brought in importation, a lot of the stuff the Washington Post article has been talking about, such as the purchases of drugs from foreign Internet pharmacies, would cease since we’d have an adequate supply of safe and effective medicines here in the United States. So people would stop buying drugs from foreign Internet pharmacies since it would be a wide, cheap source of drugs here in the United States.

And you know what? They’re right. You’d be able to buy a lot of these drugs over American-based Internet pharmacies like I did. I bought this bottle of Vicodin, a powerful and habit-forming pain killer, over the Internet without a prescription from a pharmacy based in Pembrooke Pines, Florida. Actually, I didn’t buy it: I had my 16-year-old son Zack type in his exact age, weight, height, and use my credit card to buy prescription-strength Vicodin. He also bought OxyContin, which is coming in a couple of days, and Flexeril, which is a muscle relaxant, some steroids, and some other stuff. All through an American-based Internet pharmacy.

So Congressman Emanuel is absolutely right. We’re not going to need those second-rate, foreign-based Internet pharmacies. We’re going to have our good old American pharmacies buying these drugs from overseas and packaging this stuff, and getting their own markups and pocketing the difference, and selling it to my kids, and making a good old American profit.

Here’s the hidden truth about importation. What it will do is shift the profits of this vast, criminal, illegal, and unsafe enterprise from overseas into the United States. It’s already happening and will just gather steam if we do that. To suggest it won’t happen, that somehow importation will make the sale and purchase of drugs from overseas safer, is not only irresponsible; it is intellectually dishonest.

Where Canadian Drugs Come From

Some people in Congress and your governor are suggesting we can confine importation to Canada, because we know Canada’s drug safety regulations are on par with the United States. It’s a safe, secure source of prescription drugs, right?

How many of you know Canada gets 60 percent of its prescription drugs from the United States? It makes only a very small percentage of its prescription drugs for internal consumption, and then it gets the rest of it from around the world. Most of the drugs coming into Canada are under a personal use exemption that allows people to bring in commercial quantities of these products without any inspection from Health Canada whatsoever. And it still can come in from the United States without any inspection from Customs or FDA. Under the Congressman Gutknecht bill, that amount could be of any amount brought in by any individual, any wholesaler, any distributor, without any inspection by the FDA. In fact, the FDA would be prohibited from requiring such inspections.

As more of us buy drugs from Canadian pharmacies, where do you think Canada will turn for new supplies? I bought a tranquilizer a few months ago from a Canadian Internet pharmacy. The drug that arrived came not from Canada but from Namibia, which is nowhere near Ottawa but in Africa.

Increase in Drugs Imported by Canada
During the First 8 Months of 2003
Country % increase
China 430
South Africa 369
Turkey 160
Iran 65
Saudi Arabia 90
Philippines 140
Bangladesh 1300

Now, that’s not surprising because it turns out that in the first eight months of 2003 there has been a huge increase in pharmaceutical imports into Canada from other countries. (See table.) Many of these countries are not friendly to the United States and do not have high-quality pharmaceutical industries, leading us to wonder exactly what it is they are sending to Canada and where, in turn, they are getting these drugs from.

A country that is importing more drugs from other countries and exporting more to us is doing one of two things. Either those drugs from Iran and Saudi Arabia are staying in Canada and poisoning their people, or they’re shipping them here. Anyone want to wager a bet as to which it is?

So the idea that the State of Illinois ought to start buying drugs from Canada amounts to aiding and abetting the importation of adulterated and contaminated medicines from countries like Iran, Saudi Arabia, and Bangladesh. That’s objection number one. Objection number two is that we are making it easier for people like this to sell drugs to my son on a daily and increasing basis by exploiting weaknesses that already exist in the U.S. drug system’s security.

You may save a little bit of money in the short run by allowing drug importation, maybe 2 percent. That’s what the Europeans have saved with their parallel importation programs, and what the Congressional Budget Office said we’d save on a government level. According to an audit of importation figures in Europe by IMS Global Health, the actual savings on the prescription drug side in Europe is only 1 percent.

But the price you’re going to pay is allowing people who really don’t care about public health and really don’t care about saving money to profit at the expense of the drug safety and public health infrastructure of the U.S. That system is not perfect, but it has provided American consumers, pharmaceutical companies, and physicians with the opportunity to prescribe medicines with a high degree of safety and integrity. Drug importation is going to undermine the ability of drug enforcement agencies, U.S. attorneys, and the FDA to track down criminals like this.

Robert Goldberg, Ph.D., is a senior fellow with the New York-based Manhattan Institute for Policy Research. His research interests include examining the impact of price controls on biopharmaceutical innovation. He received his Ph.D. in politics from Brandeis University. His email address is [email protected].


1 “The Benefits and Costs of Newer Drugs: Evidence from the 1996 Medical Expenditure Panel Survey,” NBER Working Paper No. 8147, October 2001.