For cheap drugs and even picks up Chris Lauzen’s support.
The idea is to import cheap drugs from Canada and then resell them in Illinois saving consumers money. On the surface it seems like a no-brainer–after all why should a border make a bid difference in drug costs?
A couple objections have popped up. The first is that Canadians don’t have the same safety controls. This is pretty silly assuming the state used Canadian licensed pharmacies. Canadians have high standards and generally this shouldn’t be a problem. In those few cases where the rules are different, the state could identify those differences.
The second objection is that by importing drugs from Canada, the State of Illinois would be driving profits down and decreasing the incentive for drug companies to invest in new drugs.
This is a far more serious problem and one not to be ignored. Some of the pharmaceutical company complaints are over the top. For one, many drugs are developed under government subsidy already and many pharmaceutical companies primarily license the drugs and then manufacture them. In such cases, a move by Illinois would have little effect. Additionally, many of the most marketed drugs aren’t significant improvements over others. Many of the heavily marketed drugs are of little therapeutic value and so reducing their availability would have little impact. Worse, many of the newest drugs are ineffective. Newly created allergy control drugs often are effective for less than 50% of the population even though they are widely prescribed without that information being conveyed by the doctor. Minor pharmacological changes are made to retain patent rights, but little or no improvement in therapeutic value is made.
For all that, reimportation is a bad idea. The debate centers on the effects of consumers, but it fails to grasp that the problem isn’t one of price gouging, but of free trade. Eseentially, the United States prescription drug market is subsidizing research for the rest of the world because the rest of the world drives a hard bargain for low costs. Since the United States doesn’t have a centralized buying cooperative those in the market pay higher costs to recoup the costs of development.
To overcome this, the United States has a few options, none of them ideal. First, it could form a collective buying group as a government and then sell the drugs to citizens at the rate they get. The disadvantages are it would drive incentives to develop new drugs down by decreasing profits. That said, so do private drug benefit plans. This would force the costs of development to be spread more evenly across countries though as the pharmaceutical companies would have to raise prices to other countries. The disadvantage to patients is that the government would be designing the formulary. As a chronic allergy sufferer, having Clarinex as my preferred drug over Zyrtec would be a real problem. Clarinex doesn’t work for me as it doesn’t for over half of the population taking antihistamines. For others the opposite would be true. It would also turn the government formulary into a political list of favored companies–remember Toricelli and Ashcroft extending the patent of Claritin beyond the normal time limit despite no compelling reason?
A second strategy would be to seek WTO sanctions. I’m guessing this would fail, but it would argue that government buying plans are in effect a form of protectionism and thus a violation of free trade agreements. Given my lack of knowledge on how pharmaceuticals are regulated under WTO, I have no idea if this would be or could be effective. And it attacks other governments’ legitimate choices concerning the provision of health care.
A third strategy would be to subsidize drug benefits on a sliding scale for those of modest means. This would generally increase prices to everyone, but ensure that the most needy have help.
A fourth strategy, and probably the most likely, is to spur the development of private drug plans and potentially subsidize entry into those plans that exploit their buying power in a price competitive environment for the plans. In a nation of 300 million, it is entirely conceivable that the plans would have the same buying power as nations–in fact, Express-Scripts claims to offer service to 50 million members. Instead of subsidizing every drug purchase, subsidizing entry into such a plan based on income would go along way to closing the gap for those in need of relatively expensive pharmaceuticals.
So Lauzen and G-Rod come together for a bad idea.