Tuesday, October 19, 2004

more on drugs

Donald Crankshaw refers to an article that say some Canadians are moving to restrict drug exports now that the US is allowing some drug imports.
Canada gets them cheaply because they've enacted price controls, but that only works because the high prices in the US subsidizes the drug development. Without the money from US sales, the drug companies would not have the money to research new drugs, causing many drug companies would go under, and drug development at those that survived would slow to a crawl.
That just can't happen economically though. The US is a far bigger market than Canada, so if Americans can get drugs at the same price as Canadians, then drug companies will have no choice but to raise prices in Canada. They aren't going to go broke just to support the Canadian socialized healthcare system. Of course Canada will respond by making exports illegal to protect their subsidy from the nice people down south, so any effect will be temporary.
Is there anything that can be done to lower prices? It's always going to be expensive to develop drugs, and new drugs are necessarily expensive until the patent runs out and anyone can duplicate it. However, some of that cost can be reduced with tort reform and some deregulation.
Both of those are necessary, of course, but we also need to stop subsidizing the drugs exported to other developed nations. The US needs to wake up to the fact that it isn't fair when the governments of Canada and other industrialized nations are competing against individuals and insurance companies in the US with their group purchases. It just isn't a fair fight. The US government needs to get involved to even things out and make these other countries pay their share.

I propose a group-buy plan for all drugs subsidized by the federal government: any drug company that sells bulk drugs to Canada, Australia, England, France, Germany, Japan, or any other wealthy nation at some price must charge no more in the US. If they do, they can't sell to the US government (including Medicare, military, veterans, etc.). In general I'm against this kind of government interference, but in this case, where it's already foreign governments against US citizens, I think our government should step in to help us out.

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