Posted on 01/09/2005 8:20:33 AM PST by ArmedNReady
Americans have eyed low drug prices just over the border in Canada, where strict price controls prevail. Some blame Bush for putting pressure on the Canadian government.... Others claim that it is a matter of public safety. But the explanation is straightforward: Canadian drug sales to the United States threaten the free ride that Canadians and other countries have received. The reason Canadians and Europeans...... pay so little for drugs is they enforce price controls. U.S. drug companies spend vast sums to develop new drugs, and Americans pay market prices for them. Once developed, drugs are inexpensive to produce and reproduce, and companies are willing to sell the medicines at a price that merely covers the marginal cost of manufacturing and distribution. Americans pay the fixed cost of research and development, and that is all-important. Companies will not keep developing new drugs unless they can recoup the massive costs of research...... Incredibly, Americans, who comprise just 5 percent of the world's population, account for 50 percent of the world's spending on drugs. In effect, the United States is underwriting the cost of a critical chunk of the world's health care. If U.S. spending on drugs dropped sharply — as a result of re-importation — drug companies would simply stop making new drugs. Canadians and Europeans, who currently benefit from both low prices and continued research, would be killing the goose that's laying the golden eggs. But American consumers too would be hurt. They would end up suffering and not living as long as they could have — since promising new therapies would never be developed. The current system, as unfair as it appears, actually works relatively well. It would work better, of course, if the world paid market prices for drugs. But the system will collapse if re-importation becomes legal.
(Excerpt) Read more at foxnews.com ...
Mr. John Lott seems to think that the current system is working well. But the facts that he states in his editorial indicate that the system is broken. Why should the citizens of the US be forced to underwrite healthcare for the entire world? This is an under-the-table tax on the US citizenry to support the health and welfare of the entire worlds population, and thusly, support the hundred of governments that are consistently anti-American. I believe that every company has a right to make whatever profits they are able to generate. But with this regulated system, all of the drug companies profits are coming out of the pockets of US citizens. This cannot be allowed to continue. It's time for Canadians and Europeans to stop being so STINGY and pay their share.
The Canadians and Europeans are essentially getting a free ride. If drug re-importation from Canada becomes a large effect, the pharmaceutical companies can simply stop selling to Canada. The Canadians lose, the pharmaceutical companies lose, the Americans lose, everybody loses.
"I find this truly amazing that someone who pupports to have knowledge of economics would overlook the cause of the problem..."
I agree with your comments about Lott's puzzling acceptance and justification of the skewed drug market and with your suggested solution through the implementation of market forces in Canada and Europe. It seems easier right now for drug manufacturers to get the US government to force US citizens to pay higher drug prices to offset their foreign losses and extortion costs than to get foreigners to pay market rates. Its time for this collusion to stop.
Most politicians know that drug re-importation from Canada is a phony issue. The previous posters are correct that Americans pay for R&D, while others get their drugs at cut rate discounts. However, it's the pharma companies that are making this deal.
When re-importation no longer makes economic sense for the pharma companies, they will raise the prices charged to the Canadians and others. If the socialist countries refuse to buy, they will have to explain to their citizens why they cannot get basic, life-saving drugs that the Americans have access to. That means they either raise taxes or get rid of their socialist leaders.
Re-importation will never mean cheaper drugs for Americans in the long run, given economic realities. One answer is for the government control the pharma business even more than it does now. You know what that does? It drives UP the cost of R&D.
Maybe I missed it in Lott's piece, but the Canadian Taxpayer
partially subsidizes the cost of a long list of drugs, in
addition to price controls.
The more drugs are re-imported to the US, the more Canadians will be taxed. Perhaps that's fitting, but
it is already reaching a breaking point to where the
Canadians are seriously considering a cap on how much
can be sent outside of Canada.
A simple solution that would not likely be looked upon favorably by the rest of the world, but then what does the US do recently that is, is for Congress to pass legislation that makes it illegal for any pharmaceutical company doing business in the US to sell their products outside the territorial limits of the US at a price less than the price they sell it for in the US.
Simple - now everyone pays the true value or manufacturing, distribution, development, research and marketing. The need to reimport drugs is now moot!
If not, then an export tax computed using the retail price in the effected company vs the retail price in the US should be imposed.
Really?
I need to pay for one medication a few dollars a pill. The same medication in "anti-American" Poland (in generic form) is available for 8% price! And this medication was invented IN FRANCE!!!
Explain me that Mr. Free Trader.
If the pharma companies raise the prices to canadastan or eurasia, the govts. said they won't recognize the pharmas patents on those meds and would make them themselves.
You nailed it: We should be free to game a corrupt system until it breaks. If it were a truly open and free market, it would not be stressed by "re-importation."
What is your point? If re-importation is allowed, you would be able to access that medication wherever the price is most favorable.
I used to oppose re-importation. Now I support it because it will be a mechanism that allows the market to work.
The American pharmaceutical industry is about a 40 billion dollar deal. Canadas is about 5 billion. The notion that Canada can supply low priced drugs to the American market is Alice in Wonderland stuff.
In effect, American manufacturers will be forced to crap or get off the pot. Charge market prices to the rest of the world or go broke.
But you already said all of that. Like I said, nice post.
Why should they? Drugs cost less in Canada, for example, because:
A) The drugs are actually manufactured there under license, and are not subject to our expensive manufacturing regulations (OSHA, FDA, workplace regulations, etc.)
B) The drugs are tax free
C) The Canadian government commits to purchase a certain amount, unlike in the U.S. and,
D) You can't sue for billions of dollars in Canada.
Now, subtract those four factors from the price of U.S. drugs, and I bet the price is cut by half.
The US should require drug companies to offer drugs for sale in the US at the same price as they sell for in other countries. We are subsidizing the rest of the world with high prices we pay here. If the drug companies have to charge more elsewhere those countries can make their own decision about buying at higher prices.
Yes that is true, and that is where the fun begins. They ignore our patents, and we ignore theirs. It's about time to fight fire with fire.
But, do they have any patents worth ignoring? Why is our govt. allowing this shakedown?
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