National Symposium on Drug Importation: The Danger of Unknown and Unknowable Costs

Published November 18, 2003

The points that are going to be made today about the safety and economics of drug importation as they relate to pharmaceutical issues and products are even more applicable to biologics: vaccines, therapeutic serums, and other biological products used to induce immunity to infectious diseases or harmful substances. In this field, investment in research is much heavier and concerns about safety and intellectual property rights are all the more severe. So everything the learned people up here say about the safety and the economic aspects of importation can be doubled or squared when applied to biologics, which are more and more coming into play as solutions to health problems, problems we could not have solved prior to biotechnology’s arrival on the scene.

What Is iBIO?

The organization I represent, iBIO, came about with the joining of two organizations, the Chicago Biotech Network that was active here in Chicago, and a bigger not-for-profit, known as IBIO, with large organizations as members, such as Monsanto, Pfizer, and the Illinois Soybean Association. They merged in 2001 to become the Illinois Biotechnology Industry Organization, or iBIO. We became the advocate of the life sciences in Illinois. We are also an affiliate of the national BIO in Washington, DC.

Some of our members, such as Abbott, Johnson & Johnson, and Pfizer, are household names, as are IBM Life Sciences and Deloitte & Touche. But in addition to them and the major universities you see in the list are many companies you’ve probably never heard of. These small companies are trying to get their start here in Illinois, using the tremendous amount of science that’s generated at our many research institutions, including some of the top research institutions in the United States.

We think of the big biotechnology centers as being San Francisco, San Diego, and Boston, but the reality is that pharmaceutical and biological firms in Illinois, according to a late 1990s Harvard School of Business study, employ close to 58,000 workers. So you’re talking about nearly 60,000 workers connected with this industry.

iBIO’s mission is to secure for Illinois and the Midwest recognition as one of the world’s great life sciences centers. And because we believe in operational definitions, we define that as a great place to do business if you’re a life sciences company and a great place to start new businesses. We want to help turn life sciences research into new companies, new wealth, new jobs, and new opportunities to contribute to solving the world’s ills right here in the Midwest.

And finally, we want to use the special properties that Chicago enjoys to secure for the Midwest greater interaction with international firms and international efforts in biotech and in life sciences. Takada, Japan’s number one pharmaceutical company, which is very interested in biotechnology and which has the sixth biggest market cap of any company in Japan, has its U.S. headquarters right here in Chicago. Fujisawa, the number six pharma company in Japan, also has its U.S. headquarters here in Chicago. Both are iBIO members trying to help us push that part of our program.

Difficult Questions

For my presentation, I want to pull together, under the rubric of management, some of the ideas that others are going to be talking about. As a student of management, one of my heroes for the last 10 or 12 years has been Dr. W. Edwards Deming, who died not too long ago. He taught quality to Japan and in later years taught it to the United States.

One of Deming’s favorite quotes was “the most important figures needed for management of any organization are unknown and unknowable.” What’s the value of a happy customer? What’s the cost of an unhappy customer? It’s difficult to gauge those things. I’m going to talk today about some of the unknowns and unknowables concerning drug importation, questions that are difficult to answer with legal citations or with available economic studies.

First of all, what’s going to be the cost of enforcing criminal actions against bogus drug dealers and counterfeiters? Those of you who have been following the Washington Post article series know that our drug system is already under attack by importation by just these kind of folks.

What’s going to be the legal cost if we give these criminals greater access to our system? What’s going to be the cost of taking care of citizens injured by poorly manufactured or otherwise unsafe drugs? Commissioner McClellan of the FDA, who’s both a PhD and a doctor, says, “a cheap drug is not a bargain if it puts your health at risk”. There’s an unintended and costly effect of getting cheap drugs.

Even in today’s system in the United States, which is the safest in the world, there are billions of dollars in costs incurred due to adverse effects from not having quite the right dosage, not having quite the right kind of indications, and so on. When you open that system up to imports from Ecuador, from India, from Pakistan, which are going to flow through Canada, because Canada does not produce much in the way of drugs, you’re really making an existing public health problem much worse.

Third, what’s going to be the cost in lives and dollars here in Illinois if we suffer a terrorist attack through Canada? You heard what the Washington Post had to say. It’s a very real possibility. The folks who engineered 9/11 have the money and the technical talent to do just that, particularly if we open the doors in the way the governor suggested.

Fourth, what’s going to be the cost to the state if the importing agencies have to fight federal and civil and criminal charges? Some of what the governor has proposed is a violation of the civil law, and if it was done with intent to violate the civil law it becomes a criminal matter. Are we going to hold those folks harmless? Are we going to spend Illinois tax dollars to defend them? What’s that going to cost?

Fifth, what’s going to be the cost to U.S. patent holders if a major U.S. industrial state contravenes the patent rights of an important industry segment? Make no mistake; this proposal contravenes the patent rights of those companies.

What’s going to be the injury to our North American free trade protocols, so hard fought for, if a major U.S. state contravenes–or more accurately, puts Canada in a position of contravening–the provisions of NAFTA? Because the provisions of NAFTA state clearly that no state should take away the intellectual property or otherwise confiscate the property of companies or the parties in another state.

Next, will the governor hold harmless drug manufacturers from lawsuits alleging unsafe drugs after the manufacturers’ loss of control over the quality of those drugs? We have a very active and aggressive plaintiff’s bar and in my lawyer days, I used to deal with them. They’re going to go after these folks, and with the companies having no control or radically losing control over the viability of their own drug source and supply and chain, which is safely controlled here in the United States, they’re going to be sued.

Is the governor going to protect them from suit? Is he going to hold them harmless? What’s that going to cost? What’s it going to cost our court system?

Impact on Business Climate

What will it cost Illinois for creating a hostile business atmosphere and vilifying a major industrial group–an industrial group that is creating about 60,000 jobs in this state?

What’s that going to do to iBIO’s work of trying to encourage new companies to start here? What’s it going to cost us in jobs? What’s it going to cost us in tax dollars? What’s it going to cost in terms of our ability to contribute to solving some of the world’s hunger, malnutrition, and disease?

What are the implications of a plan that essentially assigns an important element of U.S. sovereignty to another government?

Historically the United States has been very protective of key industries. For example, it has sought to maintain domestic industries that supply our defense system, thinking that if we run out of steel, we don’t want to rely on even friendly countries like Japan and Sweden to provide steel for our military, so we protected those industries. How much more do we want to protect what we actually put in our bodies? And yet, we’re going to trade our sovereignty in this area to Canada, to Ecuador? We’re going to trade it away to India and Pakistan? I don’t think we want to do that.

What’s the total cost now–getting back to Deming’s point–what’s the total cost, not just the price tag, of this plan to the citizens of Illinois and to the United States, beyond the savings on a given prescription drug, taking into account the answers to these questions I’ve been asking? Because it’s not just the price tag on the drug, it’s the total cost of a system that’s proposed for radical modification.

David Miller is president of iBIO, the Illinois Biotechnology Industry Organizations, headquartered in Chicago, Illinois. His email address is [email protected].