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January 9, 2017

Importation of Prescription Drugs: A Bad Idea

 
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“Reimportation” of prescription drugs is back as an issue, but only because Democrats seek to distract from the effort to repeal and replace Obamcare, according to Politico. By importation we refer to the ability of American consumers to buy their prescription drugs from overseas rather than from domestic sources, and particularly to large-scale importation, such as US drug distributors sourcing their drugs from overseas.

There has always been some cross-border traffic on pharmaceuticals, as drug prices in Canada can be cheaper than in the US. But the Medicare Part D prescription drug benefit, which came into effect in 2006, has significantly reduced this traffic by making prescription drugs available to seniors at more affordable prices.

There’s a reason why such importation is illegal today under most circumstances, and that’s because of safety. The rate of counterfeit drugs in other countries is staggering, and the only way to keep the counterfeit problem from infecting the US drug supply is through the rigorous inspection and supply-chain regime maintained by the FDA. And the FDA has repeatedly told Congress that it cannot guarantee the safety of drugs entering the US from other countries such as Canada, since it does not inspect those facilities. And when the FDA has been permitted to inspect overseas facilities, the results haven’t been encouraging, such as the extensive and discouraging history of the FDA with Indian pharmaceutical manufacturer Ranbaxy.

Some on the free-market side of the political spectrum argue that importation of prescription drugs is simply a matter of “free-trade,” which at least up until the last few months has been a persuasive argument when presented to Republicans. But, as professor Richard Epstein notes in an IPI publication noted below, importation of prescription drugs is actually a perversion of free trade, in that it rewards other countries for their price controls and socialized medicine systems, rewards them for their disregard for the patents of American drug companies, and would likely create shortages of much needed drugs in poor countries as their drug supply was diverted back to the US.

It would be bizarre for a new administration and Congress that intend to protect US manufacturers (and that includes drug manufacturers) from the unfair foreign competition of price controls, socialized medicine, and violations of US intellectual property rights, to begin by importing all of those offenses into the US through drug importation.

Yes, high prices on cutting-edge pharmaceuticals and biotech products are a concern on Capitol Hill. Efforts to address drug prices should be narrowly focused on factors that unnecessarily add to drug costs, and should not undermine patient safety, intellectual property rights, and continued US global competitiveness on prescription drug innovation.

Here’s the final take: Since the enactment of Medicare Part D prescription drug benefit, seniors are no longer clamoring for reimportation, and patient groups aren’t, either. It’s only Senate Democrats who are bringing up importation now, and it’s purely for political reasons. Reimportation is not the answer.

Here are some additional resources from IPI on importation of prescription drugs:




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