USA Today, May 21, 2004

Our view: Lifting ban on Canadian imports would provide little relief.

Prescription drug prices in the USA are 67% higher on average than in Canada. No wonder Congress is feeling the heat from consumers to end a ban on importing U.S.-made medicine from other nations. On Tuesday, Health and Human Services Secretary Tommy Thompson predicted lawmakers soon would do just that.

Yet lifting the ban would save consumers only 1% over 10 years, the Congressional Budget Office estimated last week. If the ban were lifted only for Canada, the savings would be negligible, it said. The reason: While Canada can provide deep discounts for the small number of Americans who now buy drugs across the border, it would be overwhelmed by a spike in U.S. demand. Drugmakers already are cutting exports to Canada to curb U.S. discount buying.

So if cross-border drug runs aren't a long-term fix for high U.S. prescription prices, what is? Opponents of drug importation say medicines are cheaper in countries such as Canada because their government-imposed price controls keep them from paying a fair share of research-and-development costs and interfere with a free market.

In fact, the basic laws of supply and demand are skewed in the USA, too. Retail price competition is rare because patients with insurance are insulated from the real costs of drugs. What's more, doctors and patients lack incentives to seek bargains. Several proposals could inject more competition into the system. But resistance from drugmakers, physicians and advocacy groups has stalled advances. Among them:

• Price comparisons. Last week, the federal government unveiled a Web site with detailed prices for prescription drugs, including competitors' and generic versions of brand-name medicines. The effort is designed to help seniors choose the best deal if they sign up for Medicare discount drug cards starting this week. Publicizing the data could help all consumers save money.
  
• Until now, comparison shopping for drugs was difficult because few pharmacies listed their prices. That could change now that the government is providing more information.
  
• Purchasing pools. Five states have a joint drug-buying program that has saved millions of dollars in Medicaid costs by giving them clout to negotiate discounts with drugmakers. Other states are pursuing similar plans, but pharmaceutical companies oppose the pools, saying they limit patient access to medicines not approved by states. Most states grant exceptions for patients who need other drugs, though doctors must first seek permission to prescribe them.
  
• Cost-saving guidelines. Many physicians prescribe heavily marketed drugs that can be more expensive than medicines that are just as effective. Professional associations publish guidelines that identify preferred low-cost treatments. If more doctors followed them, savings on high-blood-pressure medications alone could total $ 1.2 billion a year, according to an April study in The Journal of the American Medical Association.
  
• Generics. While drugmakers say they endorse the use of lower-priced generics, they use various tricks to extend patents and keep generics off pharmacy shelves. And generic manufacturers have signed sweetheart deals with brand-name companies to keep lower-priced versions out of the market. New federal rules that took effect last August help the Food and Drug Administration prevent companies from delaying consumers' access to generics.

Two in three Americans favor lifting the ban on reimporting drugs, an Associated Press poll in February found. Still, taking advantage of foreign price controls amounts to putting a Band-Aid on a deep wound.

Letting the free market work is a better remedy for making prescription drugs more affordable for all Americans.