Drug Importation Programs Come At Too High a Cost

Drug Importation Programs Come At Too High a Cost

Lawmakers in Colorado are trying to open their state’s borders to prescription drugs from abroad.

In 2019, they green-lit imports from Canada. They’re still working on a plan to implement that policy that can garner federal approval. Then last week, legislators approved a bill that would allow Coloradans to import prescription drugs from other countries in addition to Canada, assuming the feds give the okay.

More than a dozen states are making similar moves to permit drug importation. The professed goal of these efforts is to reduce drug costs for patients. In the long run, they’ll do far more to undermine access to high-tech medicines than to expand it.

Branded prescription drugs cost less in other countries because those countries’ governments cap their prices. So it may seem intuitive that Americans could save money by ordering their drugs from Canada. But that’s unlikely.

The supply of medicines in places like Canada — which has roughly one-tenth as many people as the United States — will never be sufficient to serve the American market. Canadian officials have said as much. Foreign governments will not allow Americans to raid their medicine cabinets.

Drug companies, meanwhile, won’t supply more medicines to those countries than they need, simply so Americans can take advantage of government-capped prices.

Further, some of the most innovative drugs are not available in Canada because the government there has deemed their prices excessive. Nevermind what Canadian patients think. Even if they could benefit from one of those innovative drugs, or wanted to pay for it out of pocket — too bad.

Coloradans hoping for a deal on some expensive drug by shopping in Canada may find that the drug they’re looking for isn’t available.

The vast majority of medicines Americans take are already affordable. Ninety percent of prescriptions filled in this country are for generics. A 2019 study found that the average price of commonly used generic drugs was just one dollar a day. Most generic drugs are cheaper in the United States than in Canada.

Drug importation isn’t just an ineffective strategy for reducing drug costs — it’s a dangerous one.

It costs nearly $3 billion to create a new medicine. And the vast majority of drug candidates fail in clinical trials. Pharmaceutical manufacturers rely on revenue from the U.S. market to fund research into the next generation of therapies and cures.

It’s not a coincidence that more than half of all new drugs are developed in the United States. That, of course, includes many of the breakthrough vaccines that will end the Covid-19 pandemic.

If American consumers start paying Canadian prices for drugs, then pharmaceutical researchers will not have the funding they need to do their work. The engine of medical progress would sputter.

The most reasonable response to the discrepancy between foreign and domestic drug prices isn’t to adopt foreign prices. It’s to demand that other countries pay their fair share of the tab for developing state-of-the-art medicines.

This essential point is lost on advocates of drug importation like Kim Bimestefer, head of Colorado’s Department of Health Care Policy & Financing. The larger goal of Colorado’s drug importation program, she said, is to “stop this country from creating ridiculous levels of profits in prescription drugs that other countries simply do not tolerate.”

A healthy profit motive isn’t a flaw of the American drug market. It’s a feature — one that helps move medical science forward. Importing price-controlled drugs from abroad won’t save patients much money. But it will weaken the system of private-sector innovation that is one of the great achievements of American capitalism.

Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All, (Encounter 2020). Follow her on Twitter @sallypipes
Read More

Other posts you might like

Subscribe to our newsletter:

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.