Blagojevich’s failed drug importation plan a cautionary tale

Blagojevich’s failed drug importation plan a cautionary tale

Former Gov. Rod Blagojevich’s recent media blitz took him across the television dial, from David Letterman to “The View,” but he maintained he had done nothing wrong.

The Illinois Legislature begged to differ. In addition to the alleged attempted sale of Barack Obama’s Senate seat, lawmakers cited several other transgressions — including an illegal prescription drug importation scheme.

Blagojevich’s alleged corruption may grab the headlines, but his flawed drug policies provide a cautionary tale. In 2004, he announced that he would implement a program for senior citizens and state workers to import prescription drugs from foreign countries. But there was one slight problem: Under state and federal law, the program would be illegal.

So he lobbied the Food and Drug Administration to give him a waiver. The FDA declined, but he went ahead with his program anyway.

The governor had fallen prey to the all-too-common myth that importing prescription drugs from abroad would reduce costs to American consumers. The logic seems reasonable enough. If prescription drugs are cheaper in places like Canada and Great Britain, why can’t Americans buy from abroad and save a few bucks?

Drugs are cheaper outside the U.S. because foreign governments have instituted price controls on medicines sold in their countries. Americans effectively bankroll pharmaceutical research and development efforts and foreigners freeload off their unwitting generosity.

If Americans began buying their drugs en masse from overseas, this imperfect system would break down. Without the revenues from U.S. consumers, pharmaceutical companies would be forced to limit their shipments abroad, which would reduce the supply of medicine and raise prices everywhere.

It takes about $1.3 billion to research and bring a new drug to market. Mass importation would destroy the pharmaceutical research system and slow the development of new life-saving cures.

Politicians such as Blagojevich don’t see these negative consequences. They only see the lower prices foreign consumers pay — and the opportunity to score cheap political points.

Blagojevich’s drug program was a failure. Despite $1 million in startup costs — courtesy of Illinois taxpayers — and the work of 500 state employees from two dozen agencies, fewer than 4,000 Illinois residents ended up using the program. The program was terminated at the end of 2008.

Why did so few sign up? Many likely didn’t save any money. Considering that generic drugs are cheaper in America than they are abroad — and that generics constitute 65 percent of all prescriptions nationwide — quite a few Illinoisans probably are getting their drugs at cut-rate prices locally.

Other residents may have had concerns about the safety of imported drugs. And it’s a good thing they did. Blagojevich cut corners on drug safety from the get-go. According to a report prepared by the state Legislature for his impeachment, the governor “did not adequately inspect foreign pharmacies, did not ensure that only approved pharmacies were filling prescriptions, and never tested the drugs for safety.”

Further, Illinois seniors are covered through the privately administered Medicare Part D prescription drug benefit. Nationwide, nearly 90 percent of seniors say they’re satisfied with their Medicare prescription drug coverage. Illinois seniors had no need for the risky importation scheme offered by Blagojevich.

One hopes the misguided popularity of drug importation will fade into political oblivion along with Illinois’ disgraced former governor.

Sally C. Pipes is President and CEO of the pro-free-market Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.