Last week, the American Association of Retired Persons launched a major campaign to allow Americans to buy "cheaper" Canadian drugs. In addition to a blitz of television and newspaper ads, the 35-million member senior-citizen organization has turned up the pressure on drug companies and politicians to legalize Canadian imports.

AARP, the nation's largest special-interest group, may well tell its senior membership that all it takes to make drugs cheaper is to send them over the border and bring them back again.

But the organization is really just extracting benefits for the few at the cost of depriving the many; that's bad policy in the long run.

Riding Canada

In fact, if AARP succeeds in pushing through this drug re-importation scheme, it would be a health care catastrophe. Critical life-enhancing drugs would become less available.

And they would end up costing more in Canada and the U.S.

AARP thinks Americans can just piggyback on Canada's socialist health care system. In Canada, the government strictly controls the price of drugs -- mandating artificial, below-market prices that don't reflect actual costs. By eliminating profits, Canadian price controls eliminate private-sector innovation as well.

That's why the world doesn't look to Canada to cure cancer or AIDS.

Meanwhile, U.S. companies -- which develop the vast majority of cutting-edge drugs -- spend an average of $800 million to develop a single new drug. They must be able to recoup this investment, which is why the ultimate price of a drug is pegged so much higher than the simple cost of manufacturing this or that pill.

Unfortunately, AARP, like many people, would rather overlook the unseen cost of research and development.

Real companies go belly up everyday when they can't meet their payroll and operating costs. It's simply not possible to fill America's medicine cabinets at below-market prices. But what about Canada? Why are American drugs sometimes cheaper there?

The Canadian government caps prices by fiat. And U.S. companies, faced with a tough business choice, can either sell to Canadians at a discount, recouping some of their sunken costs or not sell at all.

Canada is one-tenth the size of the U.S. market, so selling to Canadians at a discount is more a nuisance than a deal-breaker. It's like an airline filling otherwise empty seats for cheap prices.

However, no airline could make it if everyone got a knocked-down price.

Soon there would be no airline seats for anyone because the airline could not afford to fly. Our elaborate transportation system would collapse, and all passengers would lose.

The same principle applies with the drug industry. Cheap drugs make for good politics, but poor economics.

There's another immediate problem. If U.S. pharmaceutical companies see their drugs rebounding from Canada back into the American market and undercutting sales here, they'll simply cut back on shipments to Canada.

At that point, American drugs will become scarce for Canadians, too. This is already beginning to happen.

As more and more Americans use the Internet to illegally buy drugs from Canada, companies such as Pfizer, Lilly and GlaxoSmithKline are limiting their Canadian shipments, and legitimate Canadian distributors are hurting.

Canadians are suffering enough as it is. The Canadian system, like all attempts to control markets, also comes with a suffocating enforcement bureaucracy. The last thing America needs is to get bogged down in Canada's swamp of rules and regulations.

Many life-saving drugs aren't available at all in Canada today because of mountains of government red tape. For example, approval of AIDS drugs takes twice as long in Canada as in the U.S. And of the 100 new drugs launched in America from 1997 through 1999, only 43 have made it to market in Canada.

That's why so many Canadians travel south to buy drugs and treatments that are completely unavailable in Canada. Or a drug may be provided in one province but not in another. Examples include relatively widely used Embrel and Remicade for arthritis, Retuxin for AIDS, and Glucophage 2 for diabetes.

And even with price controls on expensive drugs, medications sold in Canada are not always cheaper, particularly generics. Recent FDA research found that Americans often pay more for drugs they order from Canada than they'd pay if they bought the generic version in the U.S.

Failed Promise

A 2001 Canadian study concluded that 75% of the 27 most popular generic drugs were significantly cheaper in the U.S. One good example is generic Prozac -- $13.19 for 100 20-mg pills in the U.S. The next lowest price in any other nation is a sticker-shock $49.78 for 100 pills.

The reality of socialist medicine is vastly different from the promise. If there were any truth in advertising, AARP's commercials would show a desperate Canadian suffering from AIDS, Hepatitis C or arthritis.

Take it from me -- a Canadian -- America doesn't want Canada's price controls, at any cost.