Q&A Friday #7: Why Not Buy Prescription Drugs From Other Countries?

by John Hawkins | November 12, 2004 7:43 pm

Question: “Can you give me one really good reason why Americans should not be allowed to buy prescription drugs from other countries?” — Schroman2002

Answer: One “really good reason”? Sure! It’s all about backdoor price controls. Let me explain….

Let’s say an American drug company makes drug x and it costs $45 a bottle to make. They sell it for a $100 a bottle here and $50 in Canada because the government in Canada has price controls on their drugs.

Then here in the US, our legislators decide they want those same cheap drugs that Soviet Canuckistan is getting, but they know they can’t get away with establishing price controls. So what do they do? They reimport the drugs from Canada. Suddenly, drugs that used to cost $100 a pop in the US, cost $60 after they’re brought in from Canada.

So everybody’s happy, right?

Unh-uh. The drug company is VERY UNHAPPY because they now have a razor thin worldwide profit margin on their product. So will they stop making it? If they’re making a profit and the risk of lawsuits isn’t insane, probably not. But, if it’s not worth it, they’ll quit making the product. In fact, this is essentially why we don’t have enough flu vaccine[1] this year. It’s because back in the nineties, the government started buying up the flu vaccine and they set a price so low that it drove some of the US manufacturers out of the business.

Furthermore, these drug companies spend enormous amounts of loot and resources on research and development and a lot of drugs they work on don’t pan out and are never brought to market. So if you make it unprofitable for them to make certain types of drugs, they’re simply going to stop working on and producing those types of drugs. Instead, they’ll focus on other drugs that allow them to make more money. So in the name of getting cheaper drugs today, we’re making it much less likely the miracle drugs of tomorrow will ever be developed.

Is that a good idea? Price controls are almost never a good idea…

Endnotes:
  1. why we don’t have enough flu vaccine: http://www.rushlimbaugh.com/home/daily/site_101404/content/institute.guest.html

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