Reimportation Threatens Innovation

Posted July 11, 2005 at 2:04pm

>There’s no doubt that pharmaceuticals cost too much, especially compared to the cost of needed medicine abroad. There’s also no doubt we need to find a solution to this problem. But none of the so-called solutions before the Congress — such as allowing importation of U.S. medicines from Canada and Europe — are the answer.

Canada and other countries with lower drug prices generally import superior American products, but they impose price controls to keep costs down. Applying similar price control measures in the United States, either directly or indirectly through drug reimportation, would pose a serious threat to the innovation Americans and the rest of the world have come to expect from our pharmaceutical industry.

History has shown that price controls — whether within the Medicare program, the energy market or elsewhere — stifle innovation and often distort the economy in untold negative ways. Medicare is a perfect example. Many providers are leaving the program because the reimbursement levels are not fair, and the program does not provide adequate support for new technologies because a two-tiered medical system disadvantages those who participate in the program with limits on payments.

So, importing price controls is definitely not the answer. Still, the price of drugs is very high, too high. What many fail to appreciate, though, is that the issue is not so much what we pay, but that many other countries aren’t paying their fair share.

American taxpayers are putting up billions of their hard-earned dollars each year for biomedical research at the National Institutes of Health while, year in and year out, many other countries essentially free-ride on U.S. research and development activities and then set price controls on the approved drugs products that are the fruits of this U.S.-financed research.

Think about the innovations in drug therapies that American pharmaceutical companies have brought to the market. Years ago we didn’t have any drugs that treated high cholesterol, no anti-AIDS drugs, no Alzheimer’s drugs, fewer types of anti-diabetics, no treatments for hepatitis C, just to name a few. Cancer care and cardiovascular treatment drugs were primitive compared to today, with much worse survival rates for patients. Doctors today are able to prescribe drug treatments that allow patients to maintain their normal lives, rather than undergoing surgeries or being debilitated by disease.

The American people have paid for this research and development that brings life-saving new drugs to the world market. While that is admirable, Congress and the administration need to use U.S. trade policy to see that our trading partners are paying their fair share of pharmaceutical research and development.

Importation is not just a threat to innovation, however. There are very serious safety concerns about drug importation. The question isn’t whether drugs in Canada are safe, but whether we can ensure the safety of drugs that are imported to the United States from Canada and other countries.

Frankly, the U.S. government simply cannot guarantee that drugs purchased from Canadian pharmacies over the internet are safe and effective. Opening our tightly regulated, closed system of prescription drug distribution will open the door to counterfeit and otherwise adulterated or misbranded drugs being widely distributed to an unwitting American public.

The FDA underscored these concerns in a Judiciary Committee hearing I chaired in July 2004. The agency has documented many cases of what appeared to be FDA-approved imported drugs that in fact were contaminated or counterfeit, contained the wrong product or incorrect dose, were accompanied by inadequate directions, or had outlived their expiration date. These drugs would be at a minimum ineffective, and could actually be harmful or fatal. And if an American consumer has an adverse drug reaction or any other problem, they would have little or no recourse because the FDA has a very limited ability to take action against foreign operators.

The FDA is also concerned with the safety of allowing companies which are not licensed by states to practice pharmacy to sell prescription drugs without any limitation on the amount or frequency of drug imports permitted for individuals.

In addition, reimportation legislation as it is written would allow risky drugs that are currently available in the U.S. only under strict safety controls to reimported at any amount or frequency to anyone — even those who are at high risk to be seriously injured by the medication.

These safety concerns are real, and if we truly care about seniors and other patients who depend upon prescription drugs, we should not expose them to what currently amounts to pharmaceutical Russian roulette.

Congress needs to continue looking for ways to make prescription drugs more affordable. Prices are just too high. But we should not do so by sacrificing the safety and the future innovations of the American drug supply. That is too high a price.

Sen. Orrin Hatch (R-Utah) is second-ranking Republican on the Finance Committee and sits on the Health, Education, Labor and Pensions Committee.