May 17, 2004
PANIC IN NEEDLE PARK
U.S. drug needs would overwhelm Canada (Julie Appleby, 5/16/04, USA TODAY)
Canada has doubled its imports of prescription drugs since 1999 — a period that saw U.S. residents increasingly buying drugs from Canada — and would be unable to meet the demand created if U.S. law allowed greater access.That's the conclusion of a University of Texas-Austin researcher, who studied the issue at the request of two congressmen, using government data from both countries. The study, out Monday, attempts to quantify the potential impact of U.S. demand for pharmaceuticals on Canada and will likely spur further debate about opening U.S. borders to medications from abroad.
The report finds:
• If all U.S. residents bought their prescription drugs from Canada, that nation's supply would be exhausted in 38 days.
• If just half of the elderly in the USA were to buy drugs from Canada, it would have to boost its drug supply by 2.5 times.
• Canada doubled the value of its drug imports since 1999, from $2.3 billion to $4.7 billion last year. In 2003, 44% of those drugs came from the USA. The rest came from more than 80 countries, including Ireland, Italy, Mexico, India, Cuba, Colombia and Guyana.
The study by Marv Shepherd, director of the Center for Pharmacoeconomic Studies at the university, comes as Congress weighs several proposals that would give U.S. citizens more access to lower-cost drugs from Canada and a short list of other countries. That legislation has gained momentum in recently. There's intensifying interest in the issue: Attorneys general from 18 states wrote Health and Human Services Secretary Tommy Thompson in early May urging him to allow importation of drugs; several governors sent a similar letter last week to President Bush.
Critics of importation may use the report to question how the United States would ensure that drugs coming from all over the world meet U.S. quality standards. The Food and Drug Administration says it cannot ensure the safety of drugs from plants it doesn't inspect.
Bah, they're mostly placebos anyway... Posted by Orrin Judd at May 17, 2004 9:28 AM
Jeez, they're just figuring this out now?
Let's see, 1 country has a population of 31++million, 1 w/almost 300 million. There's more boomers in this country than the entire population of Canada, IIRC.
I'm certainly no expert in math, but.....
Posted by: Sandy P at May 17, 2004 10:21 AMHuh?
Relatively little of this stuff is manufactured in Canada; presumably they would respond to increased demand by increasing imports. Why is this supposed to be infeasible?
Posted by: mike earl at May 17, 2004 10:42 AMMike:
Because the pharma's agreement to sell to the Canadian single-payer at around marginal cost depends upon the inability of Americans to reimport. If there's too much reimportation, they'll cut Canada adrift, take the hit on the low margin sales and continue to make the high margin US sales.
Posted by: David Cohen at May 17, 2004 12:26 PMPfizer is making noises about cutting off Canadian pharmacies that export to the US.
Predictably, US demagogues who do not understand Econ 101 are reacting.
MN Investment Board demands Pfizer end battle against Canadian Imports
Posted by: Gideon at May 17, 2004 12:51 PMThe real question is, what happens when foreign countries break the patents?
Posted by: Annoying Old Guy at May 17, 2004 12:59 PMDavid -
True enough. Now, this sort of action to block grey-market sales in order to maintain price differentials is likely a violation of WTO rules, dissembling about drug safety aside.
Posted by: mike earl at May 17, 2004 1:16 PMThe real problem is that Canadian taxpayers are being asked to subsidize southerners. It's one thing to be asked to pay for your neighbor, but another to be paying for rich foreigners. The solution would be for the Canadian gov't to close some of the loopholes like making the subsidized rates only available to residents and citizens.
Posted by: Raoul Ortega at May 17, 2004 2:00 PMBruce:
Because the Brazilians don't have tons of patents the US can start breaking if it likes. The Canadians do.
Posted by: Brian (MN) at May 17, 2004 2:45 PMI've tried to bone up on this issue since Mr. Thacker insisted we were making the world more ill, but I can't put it all together. Why doesn't the U.S. just enforce its ban on the the importation of drugs? How do you expect the Canadian government to police individual pharmacies? Make it a criminal offence to sell to sick Americans?
Nobody stops individuals leaving either country. The checking is when you enter. How can you effectively ban exports? (Asking for proof of citizenship when you buy drugs ain't going to work--if the doctor is licensed to prescribe, he can't refuse to treat an American.)
It seems to me we have two protected markets here--one by de facto price supports (which I understand is a minimal contributor to the price differential) and government bargaining power and the other by an extremely rigorous patent law defended by perhaps exaggerated health and quality control claims.
Even Buckley is looking to laissez-faire on this one.
David, seriously, if there were a patent "war", wouldn't that just open the door to a huge illicit market in generics? It is a very long and porous border.
Posted by: Peter B at May 17, 2004 4:13 PMHard to believe that drugs from Canada will stay at the same price for the next 6 months, much less the next few years. Opening the gates now will give a small percentage of the US population a chance for a discount that lasts a short time. Then chaos comes.
India is already breaking the patents - but are the molecules the same? And China probably isn't far behind.
Posted by: jim hamlen at May 17, 2004 7:27 PM