Drug companies have publicly opposed re-importation from Europe and Canada on safety grounds. Their other fear, safety aside, is allowing Americans access to the same drugs at 30-50% off. The re-importation debate has gone on for years. Now, it looks like Congress will approve such a bill. A bi-partisan bill sponsored by Senators McCain, Snowe and Dorgan was introduced this week.

The drug lobby led by PhRMA issued its expected concerns on such a bill on safety grounds. They also said the drug companies have other ways to help people pay less if they cannot afford their drugs. The reality is that this bill has enormous support in both houses and Obama wants it. It is unlikely the many drug lobbyists can stop this bill.

Senator Grassley, a Republican, said “In the United States, we import everything consumers want, so why not pharmaceuticals?” That is the general sentiment of consumers as well. No one wants to pay more than their European or Canadian counterparts pay for the same thing. What Grassley forgets to say is that the reason prices are low in other countries is government price controls, not free market competition.  The idea, then, is we can tell Americans they are getting cheaper prices through free trade when in fact it is price controls.

We also should tell Americans they risk innovation in drugs. If drug companies lost more revenue and profits where is the research budget to originate? The Senators should check the stock prices of major drug companies to see these so-called fat cats are hurting. If Congress wants to destroy an industry America needs desperately, they are starting the process with this bill.

The drug industry will probably fight re-importation by producing just enough to supply those cheaper priced markets. Therefore any re-importation will mean shortages in the home markets. Then the foreign governments may ban exports to the United States. That may cause the United States to impose price controls directly.

There is also a legitimate safety issue. While the bill calls for safety monitoring, we all know that criminals can outsmart the government.  The Chinese are great at copying European packaging. That German Lipitor may actually be made in Shanghai and contain harmful additives.

This bill is short-sighted. We need a strong domestic drug industry. It is one of the few we have left. Our new government mantra seems to be to punish business. I would much rather see government and the drug industry agree on a program to expand utilization of price support programs for low and moderate income Americans. This would lower prices to perhaps less than European prices for the low income consumers while allowing higher prices for more affluent consumers.

The risk of this bill is it creates an atmosphere where drug companies are the bad guys. Americans need to understand that forcing price reductions does in fact reduce research and innovation. I fear we will force drug companies to move their research bases to China and India. Is that what we want? Congress is doing something that will be enormously popular with their constituents but is plain counter-productive long term. 

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