Carmichael: Drug Reimportation Isn’t Such A Great Idea After All

Ellen L. Carmichael’s editorial appeared in the Hayride on May 5, 2017. Carmichael formerly served as press secretary to now-Health and Human Services Secretary Tom Price, M.D. She is currently president of The Lafayette Company.

As the country debates the future of Obamacare, many Americans have overlooked another crucial health care fight looming: drug price controls.

While supporters of this charge contend that price controls would be a big win for consumers and a tantalizing way to curb earnings for the corporations they despise, countries with systems of artificial drug pricing have experienced abysmal investment in the research and development necessary to extend, enhance and save lives. Consequently, most significant medical innovation has origins in the United States, where our scientists shoulder nearly all of the burden of sustaining global health by creating treatments and cures other countries can use and replicate.

Still, some are committed to bringing price controls to the United States, most recently in the form of drug importation. Supporters of this charge, led by Sen. Bernie Sanders (I-Vt.), insist that they’ve suddenly become free-marketeers eager to open America’s borders to robust activity in the pharmaceuticals market. They promise that by legalizing the importation of prescription drugs, they’ll really establish a more competitive system resulting in lower medical costs to both patients individually and society wholly. They insist this will make the price of health care more manageable for the American people and the government.

There’s just one problem: the “free trade” they say will benefit American patients isn’t really free trade at all. This is because transactions within an authentic free trade system occur when two or more nations voluntarily engage in a transparent, mutually beneficial transaction. When one government imposes artificial price controls, trade is no longer free.

This is especially dangerous in the world of pharmaceuticals. American companies will be inherently disadvantaged in these markets because they’re not subsidized by the federal government, as their competitors are. As a result, thriving U.S. drug companies responsible for so much of the innovation enjoyed by the entire world would come to a screeching halt. There will be no research and development with which to replace it, since foreign companies have not made comparable investments due to the curtailed profitability caused by their government’s price controls on the industry.

In addition to the disastrous economic consequences to our country, the importation of foreign drugs poses a serious threat to the health of American patients. This would be so dangerous, in fact, that in March 2017, the four most recent commissioners of the Food and Drug Administration wrote an open letter to Members of Congress, strongly urging them not to make this perilous policy change. These acclaimed doctors, hailing from both the Bush and Obama administrations, warned that this “complex and risky approach” would expose Americans to drugs that could be contaminated, below U.S. standard or even fake, putting patients’ lives at grave risk.

In an interview with The Washington Post, one FDA commissioner explained that “the vast majority of Internet sites that can advertise as being Canadian are actually based in South America, Eastern Europe and Russia,” and therefore, “consumers have no reliable way of knowing where the drugs actually came from or what’s in them.” Even worse, he said, is that patients will have no way of verifying that the medicine they think they’ve purchased is what they have received, making them vulnerable to taking a prescription cocktail that could kill them.

Finally, even if none of the forecasted economic or health risks materialized, the costs associated with complying with the United States’ rigorous health codes would make imported drugs as costly as their most expensive American competitors. Scott Gottlieb, MD, a former official with the FDA and the Centers for Medicare and Medicaid Services who will likely serve as FDA commissioner for President Donald Trump, analyzed a similar effort in 2004 and found that the “scheme would have added so much cost to the imported drugs, they wouldn’t be much cheaper than drugs sold inside our closed American system.”

Therefore, changing the law to allow for foreign drugs poses a great risk to American patients, the American economy and American innovation. Globally, it would rob billions of people of the research and development of life-saving drugs invented in the U.S. And on top of it all, the costs of foreign companies’ compliance with American standards offer scant hope that any savings would be passed to consumers or the government. If drug importation is permitted, it simply means American health care would be dictated in part by price control regulations set by foreign governments with little or no benefit to us.