Free Minds & Free Markets

Vermont Voted to Buy Its Prescription Drugs from Canada, and the Pharmaceutical Industry Is Not Pleased

Photo credit: Jeff Mcintosh/ZUMA Press/NewscomPhoto credit: Jeff Mcintosh/ZUMA Press/NewscomMany critics of America's pharmaceutical industry have argued that the best way to bring down drug prices is to let Americans buy prescription drugs from countries with nationalized health care systems. Those countries' governments negotiate lower drug prices, and their consumers pay a fraction of what Americans do for most pharmaceutical products. If Americans could order from overseas, the theory goes, pharmaceutical companies would have to lower their prices here. (They arguably can't raise them abroad.)

This week, Vermont took a step toward testing that theory by passing legislation that would create a system for wholesale importation of pharmaceuticals from Canada. Vermont Gov. Phil Scott, a Republican, signed the bill Wednesday after the state's overwhelmingly Democratic legislature voted 141–2 in the House and unanimously in the Senate to pass S.175.

"It is outrageous that a commonly used medicine like Lipitor costs 46 times more per pill in the United States than in Canada," Vermont Senate President Pro Tem Tim Ashe said in a statement released by the National Academy for State Health Policy (NASHP), which wrote the model legislation on which Vermont's bill is based. "In fact, legislative staff determined that importing just two diabetes drugs from Canada would save the state's teacher health insurance plan more than $500,000 each year."

While many Americans already order their prescription drugs from Canada, where prices are lower than in the U.S. (but higher than most other countries with socialized medicine), they do so at risk of having their drugs confiscated at the border and facing criminal penalties for illegal importation. Last year, the U.S. Food and Drug Administration raided a chain of Florida-based storefronts that simply connected American consumers with licensed Canadian pharmacies.

According to the NASHP, Vermont is the first state to pass a bill that would authorize importation. But residents won't be able to buy their cheap Canadian meds just yet. Vermont's Agency for Human Services must now develop a proposal for wholesale importation of a cost-saving formulary and send that plan to the state legislature by Jan. 1, 2019. That proposal must then be sent to the Department of Health and Human Services for federal approval. Assuming HHS signs off —which seems unlikely given the agency's concerns about Americans ordering counterfeit medicines—Vermont would have six months from the date of federal approval to implement final regulations.

"In the absence of federal action to control the cost of prescription drugs, states can't wait," NASHP Executive Director Trish Riley said in a statement.

The trade association that represents American pharmaceutical companies is less enthusiastic. Caitlin Carroll of the Pharmaceutical Research and Manufacturers of America tells Politico that Vermont's legislation is "highly irresponsible" and that "[p]atient safety must be our top priority, and our public policies should reinforce—not undermine—that commitment." (This argument would make more sense if the Lipitor Pfizer sells in Canada is actually less safe than the Lipitor it sells in America.)

The Food and Drug Administration is also likely to voice objections. Earlier this year, FDA Commissioner Scott Gottlieb gave a speech in which he said no "well-intentioned legislation" could create "a safe way to check the drugs coming in through these different importation schemes."

For more on re-importation—more accurately called "parallel trade"—please read my earlier blog post here. The short takeaway is that while parallel trade may help Vermont, there are probably not enough Canadians to lower costs for drug consumers across America.

Photo Credit: Jeff Mcintosh/ZUMA Press/Newscom

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  • Fist of Etiquette||

    4:20 post about drugs? How ironic.

  • Rat on a train||

    Like hash brownies when you're already baked.

  • Fist of Etiquette||

    Big Pharma and price controls mixed with market competition. What could go wrong?

  • Hank Phillips||

    Ontario legalized beer back about 1929. It will be interesting times in Idaho, Montana, NoDak, Wisconsin Illinoise, Indiana, Michigan, NSDAP Ohio and points east when Canada legalizes recreational hemp, other plant leaves and ecstasy.

  • gormadoc||

    Not really. Besides some uptick in traffic stops not much has happened in my state, which borders a legalized weed state.

  • LynchPin1477||

    Are there are any good guys in this story?

  • Citizen X - #6||

    Some of those Canadian drug mules are pretty friendly.

  • LynchPin1477||

    Not the Quebecois ones

  • Chipper Morning Baculum||

    I believe Rufus has some rectal space available for rent. What's your rate per linear centimeter, Rufus?

  • Citizen X - #6||

    When Rufus asks for extra gravy for his poutine, he does not mean what you want him to mean.

  • RoyMo||

    It depends on how much you tip them, at the right price a lot of Québécoise, of the sort that engage in smuggling can be very friendly.

  • SusanM||

    It's bound to be a fun watching the commentariat sort that out.

  • Telcontar the Wanderer||

    There are none.


    dusts off hands, goes back to sleep

  • SusanM||

    Awwww. Watching an epic "purer than thou" argument unfold makes the internet almost worthwhile these days. Dang it.

  • Telcontar the Wanderer||

    I'm from the anti-government and I'm here to help.

  • Mickey Rat||

    Of coursr the pharmaceuticals are not happy. The US market is about the only place where they can make up their R&D costs. Remember, all those nationalized health care systems are free riding on the American health insurance system, because they get out of paying their share of the full costs of bringing a new drug to market.

    The Canadians won't stand for this either.

  • Citizen X - #6||

    You're right. Abolish the FDA!

  • Rhywun||

    And as luck would have it - well, for the drug companies - those R&D costs are completely hidden from the consumer by our partially socialized health care system.

  • Tony||

    But maybe they're R drugs that make them money more than drugs that help people?

  • Mickey Rat||

    What drugs are naking them money thst do not help people?

  • Don't look at me.||

    They are stored in the same building with the fiberglass engine that runs on water. It runs on water, man!

  • ||

    Is that the same building that has the carburetor that gets 200MPG that that guy who is a friend of your cousin's brother in law invented?

  • Sevo||

    Yeah, but the guys from Ford killed him.

  • Curt||

    This is the part of the whole concept that just leaves me speechless. Democrats should be the biggest supporters of high drug prices in the US. It is a progressive wet dream. Those damn evil 1%-ers (Americans) are paying more for an item that everyone needs in order to make it more affordable for the comparatively poor people in the rest of the world.

    By trying to buy drugs from Canada for cheaper prices instead of paying higher prices in the US, these assholes are basically stealing from the poor.

    Is it possible that they don't actually support the idea of soaking the rich to provide for the poor when they discover that they are "the rich"? I'm shocked.

  • ||

    Who in VT would Canada actually be purchasing these drugs from? And why would that entity in Canada sell them to VT?

  • damikesc||

    It's adorable that they think Canada will sell them any considerable quantities of the subsidized drug. They won't have their own citizens either do without OR be forced to pay for Americans' drugs.

  • Chipper Morning Baculum||

    Martin Shkreli hardest hit. In his rectum, by his cell mate.
    (don't fuck up this perfect setup, Leo)

  • Citizen X - #6||

    Man, i hate knowing that the only copy of Once Upon a Time in Shaolin is locked up in a crate in some government warehouse next to the Ark of the Covenant and the preserved remains of ALF.

  • Chipper Morning Baculum||

    Don't worry. Once the aliens find the metal plate with the wiki page for it on the moon, they will set about rescuing it from the clutches of the omnipotent AI that will be the only sentient thing left on the surface of the Earth.

  • Telcontar the Wanderer||

    Presumably the AI created to run the systems of the luxurious bunker that Congress and the highest-ranking nomenklatura had built for themselves?

  • Telcontar the Wanderer||

    Probably a good thing in the long run: create a work-around to allow price controls for American medicines, watch global pharma innovation implode, use the momentum to begin the hundred-year process of dismantling the state apparatus.

  • ||

    (This argument would make more sense if the Lipitor Pfizer sells in Canada is actually less safe than the Lipitor it sells in America.)

    Actually, no, it's simply a recognition of widespread fraud that exists is the "Canadian Pharmacy" racket. Just because Canadians are polite and deferential it doesn't mean they're in some way uniquely honest.

    Not that this is a reason for any government action, caveat emptor and all. If you think you have a reliable Canadian source for your meds, knock yourself out.

  • Paloma||

    Agreed. Or Indian for that matter.

  • prolefeed||

    Or, as it turns out, Indian manufactured drugs from a Canadian wholesaler.

    Pharmstore is an honest provider.

  • Sometimes a Great Notion||

    I just hope that home 3D printed drugs can get to market quickly and they figure away to keep regulators out.

    3d Printed Drugs

  • Mickey Rat||

    I think you misunderstand what the benefit is of using a 3d printer to make a pill.

  • Don't look at me.||

    They will tax it to the point that it costs the same. Fail.

  • Benitacanova||

    Patient safety! Hilarious. Now take your oxy and shut your yapper.

  • Ornithorhynchus||

    The Congress shall have the power--

    To regulate commerce with foreign nations, and among the several States, and with the Indian Tribes

    -- US Constitution Article I Section 8 Clause 3

    I don't think Vermont's actions are going to hold up in court.

  • Bubba Jones||

    Fun fact. Canada does not regulate drugs shipped from India to Canada for export to the US.

    Will be fun to hear who gets blamed when VT buys a bunch of counterfeit drugs from India.

  • sparkstable||

    Capitalism will be to blame. Duh!!

    This, if it goes wide spread nationally, will give Atlas an itch. He may not yet shrug, but he will be thinking about it.

  • Rastaman||

    Pharma claims they have to charge US citizens so much because of "R&D", clinical testing etc. But they never talk about how they profit from it globally. Its as if they only sell it here thus the high prices. I worked for Merck over 10 years and the profits are obscene. We are the ones that pay for all these costs but they are about to kill the golden goose. There are people getting on cruises daily to go to places they can get their meds. They can go on a vacation, get their meds and still be way ahead on cash. Same damn meds.

  • Hank Phillips||

    My sinus medicine abroad costs 20% of what Uncle Sam's cartels charge.

  • Fairbanks||

    I'm guessing you didn't work in finance at Merck. The trailing 12 month return-on-equity for Merck is just over 11%. That's hardly obscene. For comparison, the average ROE for all S companies since 1929 is around 10%.

  • Sevo||

    Rastaman|5.16.18 @ 8:35PM|#
    "I worked for Merck over 10 years and the profits are obscene."

    "59.75 0.55 (+0.90 %)
    Merck on Tuesday raised its full-year 2017 adjusted profit forecast to $3.76 to $3.88 per share from the forecast of $3.72 to $3.87 it gave in February."

    6.3% profitability.
    Are you also lying about working there, or just that they didn't bother telling the janitors how to read annual reports?

  • RPGuy16||

    "And the notion of negotiated prices is crazy. for drugs still under patent. How can they negotiate on (say) a live-saving drug with NO competitors. "Reduce your prices or we'll kill our people -- THAT will show you!""

    Countries that have socialized health care have no problem with this approach.

  • Hank Phillips||

    Much of the extortion is the result of Herb Hoover's 1931 Moratorium on Brains. Germany exported recreational stimulants and narcotics to pay other European countries reparations for attacking, bombing and gassing them. In exchange for Germany's support for prohibitionist cartel-forming treaties, Hoover let them off the hook for reparations AND for the folding money German businesses owed U.S. creditors. Who knows what other deals were made by These States when light beer needed to remain a felony and the Hitler socialist party needed that extra cash to Christianize Germany?

  • Hank Phillips||

    Much of the extortion is the result of Herb Hoover's 1931 Moratorium on Brains. Germany exported recreational stimulants and narcotics to pay other European countries reparations for attacking, bombing and gassing them. In exchange for Germany's support for prohibitionist cartel-forming treaties, Hoover let them off the hook for reparations AND for the folding money German businesses owed U.S. creditors. Who knows what other deals were made by These States when light beer needed to remain a felony and the Hitler socialist party needed that extra cash to Christianize Germany?

  • gormadoc||

    The FDA being involved makes it not a free market. Taking about the free market is the right recourse.

  • MoreFreedom||

    Would a law requiring firms to offer their products at the same price to everyone regardless of where they live (excluding shipping costs) be libertarian? I say yes. After all, in free markets, if you sell to some segment of the population at lower prices, they should be free to resell the products to other segments of the population undercutting your sales at higher prices/

    Brings to mind Stossel's segment offering (cupcakes I think) at different prices to different races, and asking people what they thought of it.

  • Wrath0fKahn||

    It is ironic that this makes very clear how non-competitive / over-regulated the American pharmaceuticals are. I'm all for free trade across border of drugs, but the real magic would be easing regulations and reforming patents and testing to make pharmas compete with each other (and generics).

    The outrage over drug prices is always amusing because it's taken as a dead sign we need to socialize medicine when we have three hundred years of evidence that just introducing some competition would obliterate prices.

  • Elilis Wyatt||

    This is mostly caused by the thalidomide deaths, and hysteria, Many years ago, Cato published a study that FDA regulations take more lives than they save, Assume Canada has a 5 year period to approve a life-saving cancer drug. We take 12 years, In that gap, years 6-12, how many lives would have been saved. That's a creative way of saying that our drugs are no safer than the same drugs in Canada, despite our much longer and costlier testing ad approval,

  • Árboles de la Barranca||

    Mommie, why do Americans subsidize Canadians' pharma drugs?

  • akita96th||

    Big Pharma gives mega bucks to both parties..Laws are never passed protecting us from greedy investors...Big Pharma milks taxpayers for billions in Medicare and Medicaid for overpriced medicine and medical products.. Big Pharma is allowed to do this because of the money they throw back into politicians coffers ...We pAY for everything even the bribes that politicians get...Its a three ring circus Ponzi scheme on us...We pAY THEY PLAY.

  • thomas80901||

    when you buy your prescription drug from other pharmacies so it is expensive but you order from Canadian pharmacies so it is affordable. Anyone buy a prescription drug from Canadian pharmacies. Canadian pharmacies are cheaper than other pharmacies. I also buy my order from I have saved $200 in my prescription.


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