October 7, 2005
WHY NOT SERVE THE U.S. COMPANIES AND THE CONSUMERS?:
So Much For American Sovereignty (Benjamin Zycher, 10/07/2005, Tech Central Station)
Under a system of reimportation of price-controlled medicines, the pharmaceutical producers, understandably seeking to protect the economic value of their investments and thus their ability to develop new medicines for the future, would have incentives to limit sales into the various foreign markets, so that foreign governments in effect would not determine pharmaceutical prices in the U.S. And the foreign governments, interested in preserving adequate supplies of medicines for their own populations, have made it clear that they cannot serve as pharmacies for Americans.And so having shunted aside both the serious counterfeiting/safety issues attendant upon the drug importation system now contemplated, as well as the implicit, but huge, erosion of intellectual property rights inherent in the price controls, the Congressional proponents of such importation now must confront the unwillingness of the foreigners to serve as the price control middlemen for the U.S. market.
And confront it they have. The current proposals to allow the importation of pharmaceuticals subject to foreign price controls include provisions forcing the producers to sell to the foreign governments all the drugs demanded at the controlled prices.
Where to begin? This means that foreign governments -- or more specifically, the foreign governments imposing the tightest price constraints -- will be given the power to set prices in the U.S. Do we want the future of U.S. medical technology to be determined by political pressures overseas and/or by bureaucrats in Ottawa or Brussels or Brasilia? Apparently, some in the U.S. Congress do indeed.
American consumers are best served by requiring the companies to sell to the foreign countries at a price no lower than they charge here and then reimporting the drugs after those countries offer them to their citizens at subsidized prices. Trade agreements likely even make it unlawful for them not to allow reimportation on these terms. Posted by Orrin Judd at October 7, 2005 7:43 PM
"provisions forcing the producers to sell to the foreign governments all the drugs demanded at the controlled prices"
So, let's see--if Podunkistan demands to buy car-loads of Lavitra at 1 cent per pill, then GlaxoSmithKline has to sell it to them for that price? Great, let's have the US demand that we'll buy oil at a controlled price of $1/barrel.
Idiots!
As long as US prices offset the discounted prices in "Podunkistan" and elsewhere, they can get away with their demands. We either need to do like oj suggests or make a regulation that the US will pay no more than what other western countries pay. Our prices would go down while Canada's would go up. What kind of market is it that allows the smaller consumers the better prices?
Posted by: Patrick H at October 8, 2005 11:37 AMIt is worse than that. If the foreign price is lower than market, perforce the domestic price must be higher than market.
All reimportation does is to spread some squeeze around, as various actors take their cut. A complete reimportation regime would equalize prices, but at a slightly higher level. Isn't socialism wonderful?
Posted by: Lou Gots at October 8, 2005 11:54 AMSo isn't the goal to raise foreign prices and force those governments to subsidize public costs rather than forcing the US to subsidize foreigner's prescription costs? What mechanism would do that?