In his recent State of the State speech and in a letter to Congress, California Gov. Arnold Schwarzenegger pointed out that Canadians, Europeans, and millions of others around the world pay less for their prescription drugs because their governments impose price controls that effectively shift the financial burden of research and development to the United States. The governor recognizes that it is unfair and inappropriate that American consumers bear a disproportionate share of the cost of developing new medicines that benefit the whole world. He encouraged the Congress to demand an end to price controls in foreign countries and vigorously support those pharmaceutical and biotech companies who refuse to sell their products to countries imposing price controls.

It's good news that the Governator correctly identifies unfair, unjust, and unsustainable First World "free-riding" as the elephant in the room during every conversation about American drug prices. And it's exciting that he's calling for aggressive government action to help end it. That's a brave and honest position in these days of Big Pharma bashing. Some people don't like pharmaceutical companies, others don't like food companies, and still others aren't fond of insurance firms. But the Governor appears to understand that if you have a market-based economy, you play by market rules.

Or does he? In the same letter, he encouraged Congress to pass legislation that allows Americans to import prescription drugs from other nations in a manner that protects patient safety and respects intellectual property rights.

That's a bad idea for a number of reasons. You cannot protect intellectual property rights while, at the same time, flouting intellectual property rights. Importing brand name drugs that are less expensive abroad because of unfair price control regimes is a blatant breach of the most critical underpinning of a pharmaceutical firm's intellectual property--its patent.

Furthermore, it's a bad idea because foreign drug importation cannot be done safely. Canadian pharmacies aren't sending their American customers "the same" drugs that are for sale at a local pharmacy in Winnipeg. Americans are getting drugs from across the Atlantic while at the same time the European Union is battling an insidious and growing threat of counterfeit prescription medicines.

While "drugs from Great Britain" may sound almost as good as "drugs from Canada" to the average American, the fact is that you can't cherry-pick medicines from just one or two of the 25 European Union nations.

Last year 140 million individual drug packages were parallel-imported throughout the European Union--and a wholesaler repackaged each and every one. This means that parallel traders opened 140 million packets of drugs, removed their contents and repackaged them. Mistakes happen. For example, new labels incorrectly state the dosage strength; the new label says the box contains tablets, but inside are capsules; the expiration date and batch numbers on the medicine boxes don't match the actual batch and dates of expiration of the medicines inside; and patient information materials are often in the wrong language or are out of date.

This means that drugs purchased from a British pharmacy could come from European Union nations such as Greece, Latvia, Poland, Malta, Cyprus, or Estonia. In fact, parallel-traded medicines account for about 20% of all prescriptions filled by British pharmacies. In the EU there is no requirement to record the batch numbers of parallel-imported medicines. If a batch of medicines originally intended for sale in Greece is recalled, tracing where the entire batch has gone (for example, from Athens to London through Canada to Indianapolis) is impossible. Caveat emptor is bad health care practice and even worse health care policy. Safety cannot be compromised, even if the truth is inconvenient.

The Governor's motives are noble, but the messages he's sending are mixed. Policy makers should take his efforts seriously, but separate the wheat from the chaff.