Seattle Times, March 18, 2004

Seattleites can hold their progressive heads high again this week. After months of watching other states and municipalities around the country get nasty with Big Pharma, the Emerald City is now getting ready to claim its own piece of the barge to Canada. This week, the city held a forum to plot bulk "reimportation" of prescription drugs from those famous dollar-store prices they have up north. Lo, what it takes to make the Democrats rediscover their love for free trade.

The plan being totted around by City Councilman Tom Rasmussen is the worst kind of copycat politics. Following the eminent lead of Springfield, Mass., the scheme would require that all health-care plans for government employees purchase their prescription drugs over the border. The total savings for this exercise will be, as Austin Powers might say, "One million dollars."

That's the outside figure, naturally — others have predicted the annual savings will be closer to the neighborhood of $300,000. But when it comes to the Big Drug companies, no nickel isn't worth bending over to pick up if it shows solidarity against these capitalist exploiters of our need for Viagra, pain relief and drugs to reduce cholesterol without, you know, forgoing any cheeseburgers.

The endgame here is bigger than any co-pay savings, as many American proponents of the Canadian system will freely admit. Drug companies are now filling the void left by the tobacco companies in city budgets, at least in the political imagination. Tobacco taught politicians that with a bit of tough talk about evil fat cats, windfall paydays could be engineered through a combination of publicity and lawsuits.

How anyone who can tie their shoes imagines that the long-term answer to drug-pricing issues in this country lies in sending drugs out of the country and then bringing them back in is a mystery for the ages.

Are drugs really cheaper in Canada? Not overall. Canadians pay more for generic drugs simply because the market there isn't as attractive to drug makers. As for brand-name prescription drugs, most Americans take advantage of bulk prices available to their insurers. The actual customer usually ends up paying only a small co-pay.

In Canada, there is only one insurer — and it dictates the prices at which brand-name prescription drugs may be sold through pharmacies to customers. This system works only because the price of running off a few extra pills is virtually zero, so any price above zero can help generate revenues to repay the long-ago "sunk" costs of investment to create new drugs in the first place.

The Canadian system works brilliantly for drugs, because U.S. consumers still shoulder the bulk of research costs; they end up paying prices that create the profits that get returned to investors.

Canada's system works less spectacularly when it comes to other medical needs. As Sally Pipes at the Pacific Research Institute has documented, routine tests like MRIs sometimes require months of waiting. Nor is it uncommon for Canadians to stream south for heroic treatments when their lives are on the line from tough or unusual diseases.

The latest pharmaceuticals, however, are available to Canadians by the good graces of Americans who pay for white coats to keep playing in petri dishes. And prescription drugs are becoming a bigger wedge of health-care spending everywhere, simply because more drugs are available to do things that drugs (and perhaps no medical therapy) could do before. In fact, talk about runaway drug expenditures can be misleading: Some of the most heavily advertised categories, like cholesterol drugs, antidepressants and ulcer medications, demonstrably reduce costs by reducing the need for hospitalization and acute care.

Some conservatives fret that bus trips to Canada will eventually spell doom for the worldwide pharmaceutical industry because price controls will, willy-nilly, be imported into the world's last free (and biggest) market. But long before that happens, the Canadians will be the ones to shut the border — and quickly when they realize their pharmacies are being emptied to satisfy American appetites.

When and how this blowup will come is anybody's guess. The Bush administration is being pressured by Congress to find a way to permit mass reimportation — or else the Senate has threatened to sit on his nominee to take over Medicare and make the new Bush-created drug benefit work.

John Kerry, finger ever to the wind, has pronounced himself four-square in favor of reimportation, never mind that he would inherit the consequences as president (which would include a crash in drug stocks and a trade war with Canada).

For now, the message seems to be that drug companies, because they provide a service critical to human survival, or health, should not be allowed to profit. Much nonsense survives in the world uncorrected, but this is one delusion that will be short-lived. Two days after the markets stop funneling capital to a drug industry currently working on cures for Alzheimer's and other curses of aging baby boomers, expect a massive hue and cry from the media and public to do something to save the pharmaceutical industry.

Collin Levey writes Thursdays for editorial pages of The Times. E-mail her at clevey@seattletimes.com