National Symposium on Drug Importation: The Pros and Cons of Drug Importation

Published November 21, 2003

The speakers at this conference gave us a good idea of the depth of this issue. It is not simple. Over the course of the day, I heard seven good reasons why we should import drugs from Canada, and eight good reasons why we should not. I will try to summarize these arguments as briefly as possible. The seven arguments for importation are:

(1) Many people are paying too much for their prescription drugs or can’t afford to buy them at all. The state of Illinois can’t afford the 10 percent and 12 percent annual increases in the amount they are spending on drugs. We know that drugs in Canada are cheaper, so it’s an obvious opportunity to cut costs and possibly, for some of these people, save lives.

(2) Canadian drugs are safe. Critics cannot point to people who have died from drugs that were imported from Canada. They say, “well, wait until the next news cycle and we may be quite shocked to learn otherwise,” but that hasn’t happened yet. Right now, a strong case can be made that current importation is safe.

(3) Consumers should be free to buy a legal product from a willing seller. As a libertarian myself, I think that should be true in a wide array of areas. Why should we make an exception in this case?

(4) International trade is a source of tremendous consumer benefit. Any argument for trade restrictions has to overcome the strong presumption in favor of free trade. How is this product so different from nearly all other products that it justifies a ban on international trade?

(5) There is nothing in the U.S. Constitution that says the federal government should protect me from Canadian drugs. If it’s not in the Constitution, it’s not within the power of the federal government to do it. It should be delegated to state and local governments. They should be able to make their own choices on this issue.

(6) Companies that want to place restrictions on the price at which they sell their products to other countries ought to be required to enforce those contracts themselves. Why is the government doing their dirty work for them? Sen. Chris Lauzen pointed out what he thought were excessive profits on the part of prescription drug companies, which he thought indicated there was a lack of competition in this market. If that’s true, what we’ve got now is not really a free market.

(7) Sen. Lauzen and some of our audience members said repeatedly that price discrimination is simply unfair. Lauzen said it is wrong that some people are being charged twice or three times as much as other people, that people are right to be angry about it, and that elected officials are being called on to do something about it.

I also heard eight reasons why importation is a bad idea:

(1) Consumer safety trumps consumer choice in this case. Why? Because, “let the buyer beware” doesn’t work when you’re dealing with pills. Even an expert can’t distinguish a safe and effective pill from a counterfeit pill or a substitute, contaminated, or expired pill. And once they have entered the country, tracking and removing these poisons would be extremely costly.

(2) Cheap imports mean drug companies are going to have to cut their prices, they’re going to have less money to put into research and development. That would dry up the funds that make a very innovative, productive industry possible. The result would be lost jobs and fewer new lifesaving drugs.

(3) Price controls are inefficient. Throughout history governments have tried to put price controls on various products. It has never worked. It’s led to distortions, evasions, black markets, waste, and inefficiency. The same thing will happen if we attempt to impose price controls on drugs.

(4) Importation is a stalking horse for something else. Drug importation is the first step toward greater government control over the prescription drug industry. Right now the government exercises massive control and interference in other parts of the health care system. The drug industry is probably the freest part of the health care industry. Importation would be the first step toward bringing the drug industry into the same kind of restrictions, regulations, and price controls that have made a mess out of the rest of the health industry.

(5) Importation violates intellectual property rights, patents in particular. Importation says that if a patent has expired or isn’t honored in any country, it doesn’t have to be honored in the United States. This vitiates any patent protection. Without strong patent protection, you will see less innovation and fewer lives saved by new drugs.

(6) Importation is not a long-term solution. Companies will simply export fewer drugs to Canada. Since Canada’s market is very tiny compared to the U.S. market and since it imports most of the drugs it needs for its own residents, within a year or two the price differential would disappear, much to the disadvantage of Canadians, and we will have gained very little.

(7) There are alternatives. Right now, 5.5 million patients get free medicine from discount cards provided by major pharmaceutical manufacturers. All of the major drug companies have discount card programs that give drugs at very low price or even for free to people who are senior citizens and low-income. They also give substantial discounts to Medicaid programs and to state employees. It was mentioned briefly that state employees here in Illinois get substantial discounts already through the state program, so the difference in the price between Canadian drugs and the drugs they’re already getting will probably be quite small.

(8) Litigation looms. If you work for the state of Illinois or are a retired state employee or if you’re on Medicaid, under Governor Blagojevich’s plan, you would be receiving drugs imported from Canada and not inspected by either Health Canada or the FDA. If one of those drugs is found to be counterfeit or contaminated or expired or in some other way a threat to your health, who do you hold accountable? Do you sue the guy who sold it to the state? Do you sue the state for allowing these drugs to be provided to you? Do you sue the original manufacturer for failing to prevent the fraud? It becomes very confusing, and in confusing situations, I have noticed that lawyers make tons and tons of money and the victims typically get very little.

I hope that’s a fairly evenhanded description of the pros and cons of drug importation. I would like very much to host this sort of debate again in three or four months. We received indications of interest in speaking on this panel just in the last day or two, and we were very disappointed that we didn’t get more advocates of importation to participate. As I said at the beginning, we invited them; they refused to attend. That might change in three months or six months, so I’d like to do it again.

I hope that I’ll see all of you here when we do this again. Thank you very much for attending and have a safe and pleasant trip back home.

Joseph Bast is president of The Heartland Institute, publisher of Health Care News, and coauthor of Why We Spend Too Much on Health Care. He was the principal organizer of the National Drug Importation Symposium. His email address is [email protected].