In mid-January, three Democrats — Vermont Sen. Bernie Sanders, Maryland Rep. Elijah Cummings, and California Rep. Ro Khanna — introduced legislation that aims to reduce prescription drug prices.
Their plan would essentially peg U.S. drug prices to those in five foreign countries where prices are typically lower because their governments forcibly control them. It would also open our borders to imported drugs from Canada and other countries.
Their proposal is painfully shortsighted. It would slow pharmaceutical innovation and expose patients to dangerous counterfeits in exchange for a small amount of short-term savings.
Under their plan, the federal government would basically force drug makers to sell a given drug at or below the median price for that drug in five countries: Canada, Britain, France, Germany, and Japan.
That may sound like a good deal for U.S. patients. Why pay more for a drug than someone in Canada or France does?
Foreign Price Controls
But importing foreign price controls will have devastating consequences for patients.
For starters, it will deprive drug makers of money they could invest in research into the next generation of life-saving cures. Drug research is extremely costly. It takes about $2.6 billion and 10 years to bring a new drug to market.
That’s partially because drug research is so hard. About nine in 10 promising compounds never pan out.
Some pharmaceutical firms reinvest as much as 50% of their revenue in drug development. In 2016 alone, American drug makers spent $90 billion on research and development.
The higher prices Americans pay for prescription drugs underwrite that research. Between 2001 and 2010, the United States developed 57% of the world’s new medicines. The four largest European countries, by contrast, produced just 33%.
Free Riders On U.S. Innovation
In other words, countries with price controls are free-riding off American innovation. They leave it to American consumers to fund drug research, then enjoy the fruits of that labor at artificially low prices. President Trump has aptly referred to this practice as “global freeloading.”
The way to stop foreign countries from taking advantage of American consumers isn’t to adopt their price controls. It’s to insist that foreign governments appropriately value the intellectual property U.S. firms have painstakingly invested in developing — and vigorously enforce our trade agreements to that end.
The Sanders-Cummings-Khanna proposal would also empower the Secretary of Health and Human Services to unilaterally revoke the patent of any drug deemed “excessively priced” — even if the Secretary can’t determine the median price for a drug in the five reference countries or the U.S. price is lower than the median.
Such action would allow competing manufacturers to put less expensive generic versions on the market in short order.
Patents give those who develop drugs and their funders a period of market exclusivity to allow them to recoup their multibillion-dollar investments. Even threatening to revoke patents could dissuade companies and investors from committing money to drug research and development. And that means fewer medical breakthroughs.
Dangerous Drug Imports
Another component of the trio’s plan would legalize the importation of prescription drugs from countries like Canada. But imported drugs are currently restricted for good reason.
It’s impossible for the FDA to determine where imported medicines really come from, or what’s in them. In some cases, medicines sold by Canadian pharmacies have originated in countries with spotty safety records, like Turkey and India.
Medicines purchased from online pharmacies in Canada have been found to contain heavy metals and toxins including mercury, lead, cadmium, arsenic, and chrome.
In addition, drugs imported into Canada and not intended for its citizens are not subject to its safety regulations. So a shady importer could bring drugs into Canada from a country notorious for counterfeits, like China, declare them “for export only,” and immediately ship them on to customers in the United States who think they’re buying from a reputable Canadian pharmacy.
With their plan to tackle prescription drug prices, Sanders, Cummings, and Khanna propose to sacrifice the health and safety of present and future patients for a minuscule amount of savings. It must be stopped.