Lawmakers in the Sunshine State are looking to our northern neighbor to help them reduce drug prices. The Florida House of Representatives recently passed a bill that would allow the importation and sale of prescription drugs from Canada, where prices are generally lower because the government forcibly controls them.
Florida isn’t the only state to have jumped on this buy-Canadian bandwagon. More than a dozen states are considering or have previously weighed bills to permit the importation of foreign drugs.
Importing drugs from abroad will provide meager savings—if it provides any at all. And it could jeopardize patient safety by dramatically increasing the risk of counterfeit drugs entering the U.S. supply chain.
The case for prescription drug importation seems obvious. Consider Januvia, a drug that treats type 2 diabetes. It sells for more than $1,400 a bottle in the United States—but just $340 in Canada. Why should Americans pay more than their brethren across the border for the same drugs?
Canada’s price controls on drugs ensure that its citizens do not pay their fair share of the cost of innovation. By paying higher prices, Americans effectively subsidize the development of new drugs for the rest of the world. And that’s expensive. It takes about $2.6 billion to develop and bring a new drug to market. Just under 12% of drugs that enter clinical development actually garner regulatory approval.
But in the aggregate, prescription drug importation won’t save U.S. consumers much money. According to one study of the issue by the Congressional Budget Office, importing drugs from Canada “would produce a negligible reduction in drug spending.”
The vast majority of drugs Americans take are generics, which cost about the same in the United States as they do in Canada. So the only potential savings from importation will be on a small number of brand-name drugs.
It’s one thing for an individual to cross the border to buy a three-month supply of drugs at the margin. It’s another for a state government to import drugs en masse for thousands of people. If drug companies discovered that the drugs they’d made for sale in Canada were all being rerouted to Florida, they might stop selling drugs in Canada altogether. Or they might make sales contingent on the drugs not being exported to the United States.
Remember, too, that Canada is a relatively small country. Its entire population—37.5 million—is lower than California’s estimated 2018 population of 39.6 million. The combined population of Florida and the 15 other states that have been considering Canadian drug imports is more than double Canada’s.
“Canadian shelves would run dry,” Steve Morgan, a Canadian health economist, told Politico recently. Canada’s drug supply would be exhausted in 224 days—less than eight months—if just 10% of U.S. prescriptions were filled with Canadian drugs, according to a study published in the Canadian Pharmacists Journal.
Canadian officials aren’t likely to stand by idly as life-saving medicines intended for their citizens head south into Americans’ medicine cabinets.
So the purported benefits of importation are unlikely to materialize. The dangers, however, are very real.
In a letter to the Wall Street Journal, Mary Mayhew, the new Secretary of the Florida Agency for Health Care Administration, called drug importation “no more risky than a trip to your local Walgreens.”
The evidence suggests otherwise. Federal investigations have repeatedly found drugs labeled as being from Canada originated in other nations. A 2005 operation conducted by the Food and Drug Administration found that nearly half of the imported drugs intercepted from four select countries were purported to be from “Canadian” internet pharmacies. Of those supposedly “Canadian” drugs, 85% were from 27 other nations. Many were counterfeit.
Health officials in Canada and the United States have issued warnings about the trafficking of adulterated prescription drugs across the two countries’ border. Health Canada told an FDA task force that it “does not assure that products being sold to U.S. citizens are safe, effective, and of high quality, and does not intend to do so in the future.”
The FDA has warned that “medicine bought over the internet from foreign sources . . . may not be safe or effective.” In 2017, four former FDA commissioners—two Democrats, and two Republicans—wrote a letter to Congress expressing their opposition to drug importation. They argued that the FDA wouldn’t be able to sufficiently monitor such sales. That would open the door for manufacturers of counterfeit and substandard drugs to inject their wares into the U.S. drug supply.
Many Americans are struggling to afford medicines they need. But the answer isn’t to sanction imports of dubious origin or quality. It’s to increase competition here by streamlining the drug approval process. The Trump administration has had some success on that front. Last year, the FDA approved a record 59 novel drugs.
The United States doesn’t need to look outside its borders for lower drug prices. Market competition can reduce costs without compromising patient safety.