Why Drug 'Reimportation' Won't Die

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This piece first appeared in the Wall Street Journal on January 7, 2010.

As a threat to our nation's security, allowing imported drugs into our pharmacies ranks just below terrorism. Yet this idea refuses to die. Why is drug importation (and its twin the reimportation of American drugs from foreign countries) a bad idea? Aren't cheaper drugs good for low-income Americans?

The Food and Drug Administration's response -- reasserted last month by FDA Commissioner Margaret Hamburg -- is that imported and reimported drugs can't be guaranteed to be safe. Studies have shown that a significant percentage of drugs thought to be American-made and reimported are actually counterfeit, ineffective or even toxic. In one sting in 2003, for example, FDA and Customs officials found that 88% of the imported drug packages they inspected did not meet FDA safety standards.

But there is an even more important reason why importing drugs is dangerous. Importing foreign drugs or reimporting American-made drugs is a back-door way of introducing price controls in America. Many foreign countries, including Canada, impose price controls on drugs, which is why reimporting American-made drugs is cheaper than simply buying drugs that haven't left the country.

And allowing price controls into this country is a sure path to destroying our drug industry, which is now a prime driver in developing new and innovative pharmaceuticals. The drug industries in countries with price controls lag behind our drug industry in developing new, important drugs.

It is unfair that Americans underwrite the cost of developing new drugs for much of the rest of the world. But the solution to that disparity isn't to destroy our innovative drug industry. It would be much better to find ways to make the rest of the world pays its fair share.

So why has the idea of reimporting drugs continued to pop up? It seems that it is just too easy for populist lawmakers to depict cheaper imported drugs as a panacea for rising health-care costs. It is much harder to explain the negative impact importing drugs would have on our drug industry's ability to meet health-care needs.

Some advocates in favor of importing foreign drugs were disappointed in President Obama when he struck a deal with the drug-industry group PhRMA to keep importing drugs out of the health-care reform legislation moving in Congress. The president struck the deal to get the drug industry on board with his health-care reform initiative and succeeded at getting drug industry officials to agree to have their companies swallow about $80 billion in new costs (most negotiated price reductions for government health-care programs) in return for the understanding that no further demands would be made of them. Drug makers held up their end of the deal by paying for ads supporting health-care reform.

Imagine the drug makers' surprise, then, when almost immediately after the Senate passed its reform administration spokesmen said that importing cheap "foreign" drugs was back on the president's agenda. This despite the fact that Ms. Hamburg wrote to the Senate asserting that her agency continued to strongly oppose importing drugs, a position that is in line with positions held by every prior FDA head. The drug executives, far from getting a seat at the negotiating table were made into an entrée on the menu.

As a senator, Mr. Obama was an outspoken supporter of drug importation and remained so on the presidential campaign trail. Only when cajoling the drug industry into signing on to his reform did he suddenly turn away from that position. Now, however, he is reverting to his original position by separating importation from the actual reform bill.

The result is that the importation of possibly dangerous foreign drugs may soon be on their way to our drugstores and hospitals, and along with them will come dangerous price controls that will demolish drug innovation and condemn our children and grandchildren to cope with obsolete drugs from the dawn of the twenty-first century.