Last night the House voted 243-186 to let Americans buy drugs from abroad, a free-trade victory that was, oddly, opposed by the free-traders at the Cato Institute. Their chief argument seems to be that, because Canadian price controls artificially lower the cost of American pharmaceuticals, allowing us to buy those drugs at Canadian prices will lead to drug shortages in America. There's three problems with this position:
1. It's not like we pay market prices here either. The cost of drugs is inflated by prescription laws, by the FDA approval bottleneck, and—most significantly—by patent monopolies.
Let's not open the Pandora's box of debating whether patent laws themselves are a good idea. Even if such laws are worthwhile, there's no reason to assume that American policymakers have devised the perfect patent system: From the length of time drugs are monopolized to the question of what can be patented in the first place, our setup is defined by essentially political decisions. Why should they be sacrosanct?
2. No one's forcing the drug companies to sell their products in Canada. If the market price for pharmaceuticals really is closer to what Americans pay than to what Canadians pay, freer trade is as likely to undermine Canadian policy as it is to, in the words of Cato's Doug Bandow, "import foreign regulatory regimes."
3. When foreign governments distort a market with subsidies (cf. Europe), trade barriers (cf. Japan), or even forced labor (cf. China), the free-marketeer's usual response is still to call for opening trade and letting the chips fall where they may; the solution to one distortion, they caution, is not to add yet another. What's different about medicine?