[Pharm-policy] NYT endorses parallel imports of medicines

[James Love]

I guess it is a good thing that USTR took South Africa off the watch
list for paralle imports.
Jamie


  http://www.nytimes.com/2000/09/29/opinion/29FRI2.html

       Importing Cheaper Drugs

How 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. 







						
-- 
James Love  mailto:love@cptech.org http://www.cptech.org
Consumer Project on Technology, P.O. Box 19367, Washington, DC 20036
voice 1.202.387.8030  fax  1.202.234.5176