[Pharm-policy] [Fwd: NYTimes.com Article: Importing Cheaper Drugs]

[Paul Davis]

pdavis@CritPath.Org wrote:
Today's NYT editorial supports and and also points out
weaknesses in the domestic drug re-importation bill.

> 
> Importing Cheaper Drugs
> http://www.nytimes.com/2000/09/29/opinion/29FRI2.html
> 
> September 29, 2000
> 
> Now that the Republican leadership has joined forces with President
> Clinton, Congress is almost certain to pass a bill that would
> permit imports of American-made pharmaceutical drugs that are sold
> at low prices abroad. The Republican leaders may have come around
> to the idea to insulate themselves from charges that they have
> failed to protect Medicare and other patients from soaring drug
> prices. To be sure, a proposal designed to lower price is by no
> means a sufficient answer to the problem that millions of the
> elderly have no coverage for prescription drugs. Yet it is worth
> trying in an effort to curb prices and instill more evenness in
> global pricing.
> 
>  American manufacturers often sell patented drugs abroad for less
> than they charge in the United States. One analysis showed that a
> month's supply of an osteoporosis drug sold for $170 in the United
> States but only $45 in Canada and $51 in Mexico. The typical
> discount for patented drugs is smaller. Taking into account price
> reductions offered to Americans enrolled in managed care or
> otherwise insured, foreign drugs probably sell for 15 to 30 percent
> less. Under current law, wholesalers are not permitted to buy
> American-manufactured drugs abroad and resell them in the United
> States. The proposed bill would remove that prohibition.
> 
>  Yet the savings to consumers will almost certainly be smaller than
> sponsors expect because there are many ways the manufacturers can
> minimize the impact. The drug companies might raise their prices
> abroad, cutting the price differential. Or they might restrict
> exports to levels that foreign countries will absorb for their own
> use, leaving little for wholesalers to import back to the United
> States. Or they might change the dimensions of the pills sold
> abroad so they are no longer the same as the drugs that are
> approved for sale in this country. The rules that federal
> regulators will issue to insure that reimported drugs are safe will
> add to costs, wiping out some of the potential saving.
> 
>  Yet the proposal is worth trying for the simple reason that
> American patients now bear the brunt of development costs for drugs
> that are used worldwide. Protected by patent laws and the
> prohibition against imports, American manufacturers charge high
> prices in the domestic market. The profits cover the cost of
> finding the next blockbuster drug. Having recovered development
> costs in the domestic market, manufacturers can sell abroad at low,
> government-set prices and still add to their profits. The proposed
> legislation would attempt to tilt the market in favor of American
> consumers.
> 
>  If the proposal works as promised, and thus lowers the profit
> margins of drug companies, there is some risk that manufacturers
> might cut their research budgets for new drugs. That risk seems
> small because the incentive to discover new drugs would remain
> substantial. The drug import bill is no substitute for providing
> prescription drug coverage for the elderly. But it is worth
> enacting because it might do some good and poses no great harm.
>    
> 
> The New York Times on the Web
> http://www.nytimes.com


-- 
Paul Davis
pdavis@critpath.org
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