Reimportation III: The Epstein Factor


A new salvo in the intra-movement battle over prescription drug reimportation: Legal theory Big Gun Richard Epstein responds to a piece by Cato's Ed Crane and Roger Pilon.

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  1. I get tired of the arguments in favor of intellectual property for FDA approved drugs. This intellectual property only has value because it has jumped through bureaucratic hoops. Get rid of the FDA and we could benefit from drug research all over. This is only a problem because the government has made it a problem.

  2. If the USA refused to enforce foreign contracts with domestic companies, then the companies could choose who to sell to, and at what price. If Canada won’t enforce a contract (to not export to the States), the company can stop selling it’s product in Canada. What’s the problem?

    I’d love for Canadians to start paying the market price for drugs. I’ll probably end up paying an extra $50 / month, but it’s worth it…

  3. Pedro,

    Most of the traditional arguments for free trade (as opposed to “fair trade”) have argued that an open market for imports is beneficial for the domestic population, REGARDLESS of what foreign governments do. If foreign governments intervene in their own economies, subsidize exports, impose import duties, dump surplus produce outside below cost outside a protected domestic market, etc., so much the worse for their own citizens.

    To retaliate by imposing import restrictions on our own market, and thus to hurt American consumers to aid domestic industry in the fight against foreign restrictionism, is the “fair trade” fallacy.

    It is quite discouraging to see avowed “libertarians” resorting to that “fair trade” dogma in order to protect their beloved drug industry. There is no limit to the tariffs that can be sold as “fair trade” sanctions against foreign protectionism. How is this any different from favoring steel tariffs to prevent Japanese dumping, and so forth?

    The “fair trade” dogma of relying on the State to sanction foreign states, is what separates real free trade from the mercantilist, bureaucratic system of managed “free trade” supervised by the WTO.

  4. Isn’t that what I said?

  5. Wow, what a great couple of articles … well reasoned, accurately portraying the positions of the other, intellectually honest.

    Man, don’t you wish this level of debate made it to the newspapers and TV?


  6. Wow! This is a battle of titans in the libertarian movement. As usual, I think Professor Epstein has the more reasoned (excuse the pun) and thoughtful argument. It is not anti-libertarian for the government to step into the shoes of an aggrieved seller to enforce its contracts. Happens all the time. If a large polluter is causing a lot of small nuisances against many nearby homeowners, it makes sense for the district attorney or attorney general to step into the homeowners’ shoes and file a lawsuit on their behalf to enjoin the wrongdoer.

    As much as I respect Crane and Pilon, they are out of their league with Professor Epstein.


  7. I think having the US Government ban reimportation might be a bit too heavy-handed. Let the pharmaceutical companies decide whether or not they wish to continue selling to the free-riding, contract-breaking Canadians. If the Canadians still want to support reimportation, then charge them the going rate in the U.S. The Canadians can then either:

    1. Go without certain drugs because they can’t support market prices in their single-payer system.
    2. Pay the going US rate.
    3. Violate the drug companies’ patents and make their own version.

    If the Canadians chose option 3, then it’s time for the US govt to step in and lay the smack down.

  8. That’s all fine, Matt, except for two things:

    (1) The US government has never, in the past, stepped up to do anything about a foreign government that engaged in “compulsory licensing” (that is, theft) of a drug patent.

    (2) After a reimportation bill passes, any compulsory licensed drugs will likely be low-cost drugs that are eligible for reimportation. For the US government to step in at that point will require it to take the low-cost drug out of the hands of US consumers. Care to make odds on whether that would happen.

    Put yourself in the shoes of a pharma company. You have a big investment in a new product. Other countries have a history of threatening to steal your product, and the US government, which has never done anything about this in the past, now has a big domestic political incentive to do nothing. Are you gonna bet the ranch on the US government taking money out of the pockets of voters to protect your profits?

  9. The US government has enough to worry about at home. Why the hell should they be spending tax-payers’ money enforcing foreign contracts? Let the companies worry about it.

    Drug companies can stop selling at under-market prices, and everything will be peachie.

  10. Pedro,

    Yes. I was just agreeing with you–at length.

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