Thursday, March 5, 2009

Drug Reimportation Bill

Well folks, it looks like the issue to drug reimportation is back on the table!

Former Presidential candidate Senator McCain has reintroduced a bill to allow FDA approved drugs from Canada, Australia, Europe, etc to be reimported to the US. This is all in an effort to get lower drug prices for Americans.

I am not sure how all of this will work, the backlash could quite possibly be that the drug costs will significantly increase in these other countries. Why do I say that? Very simply, this bill forgets the importance that a drug distributor like McKesson, for example plays in increasing drug costs to end users. So, while some provincial and federal governments in some of these countries do work hard to keep drug costs down because inevitably (oops Nathan there is that word again) the tax payers pay for the drugs through their universal healthcare plans....McKesson and other drug distributors finds many ways to go around them.

My suggestion is that we all need to keep a close ey on our drug costs....Lets see what happens to drug costs in Canada.

Read the full article on PharmaLive, then come back here and have your say....


  1. Actually, consumers will bear nearly all of the counterfeit drug risks created by legalized diversion ("importation"), yet receive little cost savings in return. My Drug Channels blog post today on this bill provides much more information:

    Surprise! New Importation Bill Introduced

    FYI, wholesalers actually account for little of U.S. drug costs -- less than 3%. However, I do believe that they will benefit from importation legislation.


  2. Adam, thank you for your analysis of the bill and the links.

    You cited some counterfeit drug cases, posted on the FDA Web site, to support your statement, "Drug diversion is the primary way that counterfeit drugs get into legitimate pharmacies.” This may be true, but the cases you cited involved China, which is not one of the countries listed in the bill. Here is an excerpt from the FDA Web site:

    “OCI [Office of Criminal Investigations] and ICE [U.S. Immigration and Customs Enforcement] conducted a joint investigation and assisted the Chinese authorities in determining the source of counterfeit drugs. As a result of this collaborative effort, Chinese authorities arrested 11 individuals who will be prosecuted by the Chinese government for their involvement in manufacturing and distributing counterfeit Lipitor, Viagra, and Cialis." []

    And here is an excerpt from the press release on The Prescription Drug Importation Bill:

    “The bill allows U.S.-licensed pharmacies and drug wholesalers to import FDA-approved medications from Canada, Europe, Australia, New Zealand and Japan and pass along the savings to American customers. This approach will allow Americans to benefit from prices in these countries, which are 35 to 55 percent lower than in the U.S., while still enabling consumers to receive medications at a local pharmacy. The legislation would also allow individual consumers to purchase prescription drugs for personal use from safe, reliable, FDA-inspected Canadian pharmacies.

    The legislation contains strong safeguards to prohibit drug counterfeiting or any other practices that would put the consumer at risk, and applies only to FDA-approved prescription drugs produced in FDA-approved plants from countries with comparable safety standards.”

  3. Sorry not to paste in all links if it's there, but what is the foreseen cost re: beefing up the OCI and ICE to be capable of this degree of enforcement. I do not think they could do it within their current FTEs.

    I understand the argument will include the fact that such costs are counter-balanced by anticipated savings that importation would bring. I'm an "agnostic" on this one.

  4. Actually, I'm all for drug-reimportation (as long as counterfeits can be kept out). Right now, there is not any sort of "free trade" among pharmaceuticals. Therefore, there are huge discrepencies in prices across the nations. This isn't moral and it isn't sustainable. My feeling is that allowing drug reimportation will slightly lower drug costs in the US while significantly increase them elsewhere in the world. This is only fair: right now, the inflated US prices are what supports the massive R&D engine that produces drugs. It's not fair that US consumers bare the financial responsibility to develop drugs that are used worldwide.

    Drug reimportation will either level out prices or collapse almost immediately. Take Canada for example. Pharma companies sell drugs to Canada for a fraction of the price of US drugs. Suddenly reimportation is allowed. Now, all the drugs that were previously intended for Candadian consumption are suddenly diverted to the US because the distributers can make more money in the US. Therefore, Canada suddenly tries to buy more drugs at the reduced prices. Pharma has two choices: Deny Canada the drugs or increase the price. If they deny Canada the drugs, reimportation suddenly ceases to exist. If they increase the price, then suddenly reimportation fails to have the desired effect on the US market.

    Either way, pharma will come out largely unscathed by reimportation.

  5. Nathan,

    If the government of these countries where drugs are lower in cost wake up, then Pharma will not be able to increase the costs of the drugs in those countries. Remember the only reason why they are lower in these other countries, is because the governments subsidize the cost as part of their universal health care systems that these other countries have. In spite of what my fellow Americans tell me, we do not live in the greatest country, because we prey on our sick and poor people. Health Care reform will change this..

    I would strongly urge citizens of these other countries to start petitioning their governments now!!!

    They shouldn't let us crazy Americans ruin their health care system..

  6. FPME writes: "Remember the only reason why they are lower in these other countries, is because the governments subsidize the cost..."

    1) That isn't necessarily the case. In many countries, the governments have negotiated a lower price with pharma.
    2) If government subsidies are what keeps drug prices low in other countries, then this plan will fail almost immediately. Why would the Canadian government subsidize US consumers?

    I really don't understand why John McCain and others really support reimportation. If they stoped and thought about the issue seriously for 10 minutes, they would realize that it is a completely empty plan that does nothing to address any real issues. All it will do is shift the cost burden around - it won't lower costs.

  7. Nathan,

    To your point number 1.) Yes, governments subsidize the cost of essential and non essential drugs in countries where there is a universal health care plan. That is why NICE does what they do. The drugs must be both cost effective and efficacious.

    If you really believed in your point number 1.) Why did you start your point number 2.) with "IF".

    Why would John McCain support reimportation?

    1.) He is being ill advised and actually thinks he is doing some good to the overall problem of healthcare.

    2.) He knows precisely that the drug distributors will manipulate the pricing to the point that drugs will be equally expensive in all other countries and thereby undermine the democrats health care reform program...

    By the way in reviewing the cost of certain drugs in various countries (part of my Pharma marketing work that I still do from time to time on a consulting basis) I can see drug costs being edged up in certain countries, particularly Canada...

    We agree on something here Nathan - drug reimportation is an empty plan, but I would add that it has a potential to impede health care reform...

  8. Just one comment on the issue: as a nation we currently import more pharmaceuticals then we export and I am sure many of these imports are as Nancy pointed out, counterfeit. I believe in the Balance of Trade Statement for 2008 our imports totalled 80 billion dollars and our exports totalled 40 Billion dollars.
    Therefore the counterfeiting argument is a red herring and as to FDA staffing, since the countries on the list probably have inspection safeguards similar to the US, I don't believe allowing end users the right to purchase from these countries will stretch the FDA's resources significantly.


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