Importing Medicines from Canada

Of course it sounds good and many organizations such as AARP (see AARP) are suporting such a policy but does it make economic sense? If a drug manufactured for sale in the US is twice the cost of the same drug (same pill, same safety standards) made for sale elsewhere (eg. Canada) why not allow American consumers to have it shipped here?

Because drug companies like all businesses tailor their pricing structures to the markets. It's called the free market. Think that delicious Big Mac costs the same in downtown Manhattan as in Tijuana, Mexico? No because MacDonald's bases its pricing on what the local market will bear. Same with the drug companies. I'm sure however, that MacDonald's isn't worried about New Yorkers importing their burgers from Mexico but Pfizer is sure worried about you buying Lipitor from Canada at their local prices.

Now you might ask, shouldn't the free market allow the consumer to buy their medications from anyone that will sell them? My response is yes and no. The free market isn't absolute and governments do put breaks upon it in certain circumstances. If I want to manufacture and sell "John's Lipitor Knock-off" in my garage, as a society, most of us wouldn't have too many objections to the feds stopping me. The public's safety is an overiding concern.

If the public could freely buy American-made medications from outside the country, our standards of purity, safety, etc. cannot be guaranteed. If a Canadian pharmacy switched things around, our government could do nothing to stop it or prosecute it. This may appear "protectionist" but clearly there is an American public interest as our standards (for better or worse) are higher than just about anywhere in the world.

That is not to say that those are the underlying motivations for the opposition American drug companies have voiced against free importation of such drugs. They don't want us buying Viagra at a dramatic discount by mail from other countries when they could be required to buy it in the U.S. at American prices. And why limit imports to Canada? Why not allow your favorite anti-AIDS drug to be imported from Somalia where I'm sure it's much cheaper even than in Canada (although Somalia's standards may be far worse than Canada's)?

Again, the pharmaceutical industry, while voicing these arguments can be assumed to have a "hidden" agenda, ie. a cut in profit margin. But consider other consequences of allow free importation from a country such as Canada:

• Since the U.S. market is so much larger than Canada's, American companies may very well say fine, we just won't offer our meds to Canada (or anywhere in the third world for that matter).
• Companies might artificially limit exports to Canada in an attempt to squeeze them into restricting sales to Canadian residents.
• Companies might boost the price in the U.S. to make up for the lost revenue thus penalizing in-country purchasers.

The point I'm making is that changing the law to permit previously illegal importation of medicines from Canada may not yield the expected economic benefit and may make things MORE expensive for most American drug consumers. In addition, such changes would limit our ability to scrutinize issues of unsafe, impure or counterfeit medications.

The argument can certainly be made that if we truly have faith in a free market, than free market forces should be allowed to exert themselves and sort things out. All I'm saying is that the results may not be what you wish for.