We’re written before about U.S. Senator David Vitter’s quixotic fight to legalize the purchase of Canadian drugs by Americans — long after the battle over reimportation has been lost in a thick haze of Big Pharma backroom bargaining with the White House.
Last week, Vitter — a Republican — took some heat from liberals by explaining at a town hall meeting that he hoped to de-stabilize pricing in Canada and other countries with “socialized medicine” by legalizing reimportation.
The Daily Kos ripped Vitter, saying:
His reason for supporting re-importation is solely predicated on the notion that if enough Americans partake, it might wreck Canada’s system … Despite the lack of plausibility in his “logic”, Vitter now claims the clubhouse lead for worst rationale for a policy position ever.
No, not exactly.
What Vitter is really talking about is using the global free market to rationalize prices worldwide. And to that I say, Amen!
As Vitter explains:
I believe re-importation will cause the pricing system world-wide that the big drug companies exploit to collapse. Right now the big drug companies are able to charge very different prices in different countries, and of course we pay the highest price of all. If they did that, like they do now, but then we can write off to Canada, and pass certain safety provisions, and get drugs from there – guess what? That system implodes. That system can’t survive. So my ultimate goal, in terms of re-importation, is causing that system to collapse, so there’s a true, world-wide price for a drug. And that might – wouldn’t might – that would increase the cost in Canada, that would dramatically decrease the cost in the US.
Sounds good to me. How about you?
Some analysts say that if drug reimportation were legalized and it led to a run on Canadian pharmacies by Americans, the Canadian government would simply restrict supplies of exports so as not to distort its pricing system.
I’m not sure exactly how things would unfold. But the most important consequence would be that the cat would be out of the bag, once and for all, on prescription drug prices. Once Americans were legally able to buy drugs at the much-lower prices charged in every other industrialized nation, they would never go back to accepting the outrageous prices that drug companies are allowed to charge in the United States.
Would prices in Canada rise, as Vitter suggests? It’s possible, I suppose. But frankly, I doubt it.
Guess what? Drug companies sell their drugs in Canada because they make money doing it. It’s not charity work. If Canada’s so-called “price controls” prevented Big Pharma from making a profit, they would simply pull out of the Canadian market.
The reality is, the prices that Canadians (and Europeans, Australians, Japanese, etc.) pay for their medications are enough to keep the pharmaceutical industry fat and happy.
I think the only real impact of a free global market in pharmaceuticals is that drug prices in the United States would drop by 25 to 40 percent — and would not continue to rise at three times the rate of inflation, as they’ve been doing for years.
And Big Pharma would do just fine. It would simply have to settle for something less than the 30 percent profit margins to which it has become accustomed.32