Drugs and Loss of Controls


Over at U.S. Politics Today, Joe Rothstein highlights the bogusness of the "public safety" argument against importing prescription drugs from Canada. But while Rothstein credits the Canadian government with protecting its citizens from the drug industry's "price gouging," David Henderson and Charley Hooper note in a recent Washington Times op-ed piece that the likely upshot of free trade in pharmaceuticals would be an end to Canadian price controls.

[Thanks to Mark Lambert for the Rothstein link.]

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  1. A third alternative? Drug makers will no longer use incremental costing to price to the world. Top protect profit margins, they sell at the U.S. price around the world. Foreign prices = U.S. prices. The foreign country (usually socialized medicine) response: “Well allow patent infringement.” This has already happened with AIDS drugs.

    Once a foreign country allows patent infringement, then the risk of counterfeit drugs becomes real, and the ban on reimportation becomes one of the functions that arguably, the government really should perform.

  2. “Counterfeit drugs would not have the manufacturing and quality controls that the ?real? ones enjoy.”

    And wouldn’t the consumer know this and make his choice accordingly? The pharma could market the product saying “Choose only genuine Triopenin” or something like that. And the drug stores could do the same.

    I can understand the patent issues, although I’m not much of an IP believer. I have a harder time with the consumer safety issues.

  3. The evil pharmaceutical cooperations and their profits
    is the rally cry I’m hearing.
    How to balance an engine to drive the US drug industry
    and the copyright infringment potential in the world
    is going to be critical in the coming years.
    One more industry is going to go over seas.
    I doubt drugs become much cheaper in any case…
    the rich pay more.

  4. Jason,

    The free ride begins by the foreign country assuming that the US FDA is their own testing ground. Like saying, “if the FDA approved it, it must be safe.” Which may not be a bad thing, redundant testing isn’t always necessary.

    But even if I don’t use prescription drugs, my taxes pay for the FDA. Seems like if a country is using the US FDA as its testing board, they ought to pony up some of the dough for it.

    Now, if the FDA were a private concern, many pharmas would gladly pay for FDA approval just for the marketing advantage. And that would be global. As it stands now, the drug patent is useless without the FDA approval. The present line is blurred. Are the Canucks free riding on the US patent protection or on the US safety testing? The present answer is probably both, but they are two separate issues. How much R&D cost % of a typical new drug goes into the “invention” versus the FDA approval?

    In short, patents are issued for drugs the FDA does not approve. (thalidomide, for example, though it’s approved for other things now.) I would love to believe that people actually gave a shit about IP, but what they really give a shit about is market protection. Calling it IP is just the “for the children”-type phony cover story. Because the IP protection isn’t worth jack if the drug isn’t approved.

  5. “The question is whether patents mean anything. As they are a point of law, they can only be overridden on large scale by governments.”
    Well all property is a point of law and would cease to exist if government protection was removed, except to the extent that you can physically defend it yourself.

  6. And still no Canuck has addressed the question of who will pay for R&D …

  7. As much as I’d like to believe Cooper’s argument, pharmaceuticals have an option beyond limiting supplies to Canada. They can take an active role in making sure that only pharmacies and not mail order companies are getting their drugs. If they find a pharmacy selling to non-end consumers, they can cut off the supplies to that pharmacist. The prices in Canada might feel some pressure, but there is enough incentive for the pharmaceutical companies to protect their profits that they can use an intense scheme like this one.

  8. The U.S. Policy story only addresses one of the potential concerns. It’s my understanding that every time Canadian price increases has been mentioned, a threat of copying (counterfeiting) of drugs has been the counter-response by the Canadians. This becomes a different issue entirely. Counterfeit drugs would not have the manufacturing and quality controls that the “real” ones enjoy.


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