Presidents Bill Clinton and George W. Bush supported reimportation of pharmaceuticals as a solution to prescription drug woes. But now Health and Human Services (HHS) Secretary Tommy Thompson suggests he opposes reimportation as a risk to public health.

Reimportation allows a U.S. manufactured drug, sold in another country at a lower price, to be reimported back to the U.S. and sold for less. For example, in France manufacturers sell prescription drugs to wholesalers within the country at one price, but then sell the same products to Italian wholesalers for half the price. Reimportation allows French wholesalers and pharmacies to buy drugs at half-price from Italy and undercut the rest of the market back in France.

At first glance, reimportation seems like an appealing solution. However, many factors—most of which are out of Washington’s hands —affect price.

Manufacturers sell drugs at different prices in different countries for several reasons. First, some nations regulate drug costs with government price controls that artificially lower the price of pharmaceuticals. This is the case in France, Canada, and Japan. Second, in countries with lower per-capita income, such as Belize, prices are naturally set lower making pharmaceuticals cheaper than in other countries, and other countries pay only the cost of manufacturing the drug and receive a smaller profit. As a result, pharmaceutical companies rely on U.S. consumers to foot the bill for much of the research and development costs.

Some companies maintain that allowing the reimportation of drugs from countries with price controls, indirectly imposes price controls on the United States. Predictably, this could lead the pharmaceutical industry and foreign wholesalers to raise prices abroad. Alternatively, American firms could decide to limit drug exports to foreign markets or to eliminate exports altogether.

Last year President Clinton signed a law allowing reimportation of pharmaceuticals. George W. Bush gave his support, commenting the legislation might help the elderly. But in January, former HHS Secretary Donna Shalala decided against implementing the law since it would not lower costs or ensure safety. At the end of January, a bipartisan group of 16 senators and congressmen advised President Bush to overturn Shalala’s decision. Most recently, Senator Debbie Stabenow (D-MI) introduced legislation aimed at clarifying the problems of the original reimportation bill.

The reimportation law automatically expires five years after its regulations are in place. Additionally, importers and wholesalers might not use FDA approved labels on reimported products, preventing them from being sold legally in the U.S. Moreover, manufacturers could use contracts to discourage distributors from reimportation.

Lawmakers included $23 million for the FDA to ensure that reimports are not counterfeits and pose no additional safety risk. Nevertheless, Shalala wrote, “flaws and loopholes contained in the reimportation provision make it impossible for me to demonstrate that it is safe and cost effective.”

Currently, the FDA inspects less than one percent of drug imports. The FDA is expected to take two years writing and implementing the complex regulations to police the way drugs are stored and transported. Afterward, import regulation will cost an estimated $93 million annually for five years. However, no amount of spending, or training, will help U.S. Customs tell the difference between counterfeit and authentic drugs.

Reimportation is a quick-fix measure for a continuing problem. Ratifying reimportation legislation takes less effort than enacting serious Medicare reform, the real issue. In the long run, any drug prices that drop will rise to equilibrium and the legislation will do nothing to increase availability or choice.

Reimportation might score political points in Washington, but it will do little to reform an outdated Medicare program that provides a one-size-fits-all approach for our nation’s 38 million elderly and disabled beneficiaries. Two-thirds of seniors on Medicare already have prescription drug coverage. But instead of focusing on comprehensive Medicare reform or ways to provide a safety net for those lacking coverage, lawmakers crafted a convoluted, counter-productive reimportation law that ignores the real problems.

Overturning Shalala’s prudent decision would do nothing to expand access and choice for our nation’s Medicare population. It is time for some real leadership from the new Administration on the Medicare issue. The health concerns of seniors, and everyone else, are too important to be risked.