Exporting Drug Prices

Who's afraid of reimportation?

When members of Congress first suggested legalizing the reimportation of prescription drugs from Canada several years ago, some erstwhile supporters of free trade opposed the idea, arguing that Canadian price controls would be imported along with the pills. Now it looks like reimportation, which Congress will consider again this year, might undermine Canadian regulations instead.

In January, four groups representing Canadian pharmacists and drug distributors urged their government to ban the export of medicine intended for the Canadian market. "This American legislative proposal poses an imminent and serious threat to the security and integrity of Canada's drug supply," they said in a letter to Health Minister Tony Clement.

As a result of government-negotiated prices, drugs produced by American companies sell for up to 55 percent less in Canada than in the U.S. "There is concern," The Globe and Mail reported, "that bulk export of the cheaper drugs to the U.S. market will provoke the drug manufacturers to argue for an end to the pricing agreement."

Pharmaceutical companies argue that the higher prices paid by Americans underwrite the research and development that makes new drugs possible, in effect subsidizing consumers in other countries. If the Canadian pharmacists' fears are justified, reimportation could force our northern neighbors to share that burden.

But Gord Haugh, general manager of the Canadian International Pharmacy Association, cast doubt on that scenario, noting that most Americans have prescription drug coverage. Although his group supports an export ban, Haugh told The Globe and Mail, "it is expected that only a very small additional percentage of U.S. customers would start to order their drugs internationally should this bill become law."