Pressure Building for Drug Importation

Importing drugs would save Americans 30 to 300 percent of the cost, but industry sources say that with this discount come fewer safety controls and a risk to the development of new life-saving medicines.

As baby boomers inch toward retirement and rising medical needs, politicians on both sides of the aisle are looking for ways to lower drug prices without risking future drug research and development. The easiest fix — allowing Americans to import drugs from Canada, Europe and elsewhere — also creates safety concerns, say opponents, and would create an imbalance in the American market.

"I urge members to ensure that any changes [to America's drug policy] do not require American citizens to give up the 'gold standard' in drug safety," said Food and Drug Administration (search) Commissioner Mark McClellan, testifying before the Senate Commerce, Science and Transportation Committee (search) last week.

McClellan, who was confirmed Friday as head of the new Medicare prescription drug entitlement after bowing to pressure to testify on the topic, warned that drug counterfeiters and dishonest or unqualified drug salesmen presented a risk to Americans seeking to buy drugs abroad.

Foreign "outlets may dispense expired, subpotent, contaminated or counterfeit product, the wrong or a contraindicated product, an incorrect dose, or medication unaccompanied by adequate directions for use. The drugs may not have been packaged and stored under appropriate conditions to prevent against degradation, and there is no assurance that these products were manufactured under current good manufacturing practice standards," McClellan testified.

The risks in taking these drugs include serious health complications and even death, he added.

But Ron Pollack, executive director of Families USA (search), a national nonprofit dedicated to affordable health care, said those risks can all be effectively combated.

"You can deal with these dangers. We import foods from all over the world. There's no reason you can't provide that protection for pills as with any other product. The administration's rigid opposition to reimportation is more a matter of currying political favor with the pharmaceutical lobby than it is about protecting the American public," he said.

Pollack said importing drugs is no panacea for high drug prices, but is a useful "stopgap measure" that will crucially lower drug prices for some Americans.

Last summer the House passed the Pharmaceutical Market Access Act (search), a bill that would ease drug importation. The measure is awaiting consideration by the Senate.

Rep. Gil Gutknecht (search), R-Minn., sponsor of the bill, called the safety concerns of foreign drugs exaggerated, saying that not one American has died from imported pharmaceuticals. He also argued that importing drugs is a matter of free trade, which would end up lowering American drug prices.

Drug companies argue that if their profits decline, they will no longer have the funds to devote to the research and development of groundbreaking new drugs. Because Europe, Canada and Japan suppress drug prices through price controls and other mechanisms, the resources necessarily come from America, which also derives a massive benefit, they argue.

Jack Cox, spokesman for the pharmaceutical giant Pfizer, acknowledged that prescription drugs are expensive, but said importation is not the answer.

"Our position is: The answer to access isn’t Canada. It's insurance. The people who are paying full price are those without insurance," he said, adding that the new Medicare prescription drug program will help and other programs should be considered.

But Gutknecht said the current system is not tenable.

"I don’t know what the right number is but here's what I do know, Americans aren’t willing to pay all the freight anymore. Drug companies have shifted their problem onto American consumers," he said.

Gutknecht said opening up the American market to drug imports will force drug companies to reconsider their pricing structure. No longer will they be able to pay the high costs of research and development through American profits, while using European consumers just to pay the marginal cost of producing the last pill. Instead, the difference in drug prices at home and abroad will narrow and consumers will pay closer to their fair share, with Americans saving hundreds of billions of dollars.

"I think American consumers should be willing to subsidize poor, developing countries like sub-Saharan Africa, but I do not think Americans should be willing to subsidize the starving Swiss, he said.

While Gutknecht suggested the pressure of an open American market would force other countries' prices to move up and American prices to move down, Cox said market liberalization would be better achieved by having American trade officials work with their foreign counterparts.

"Instead of importing foreign prices, we need to be exporting markets. In the long term, if we completely opened up all borders to importation we are no longer allowing companies to recoup any of their investments into new medicines. It's only going to hurt R-and-D," Cox said. Case in point, he said, price controls in Europe have seriously undermined research and development of new drugs by companies there.

Gutknecht said his position is receiving overwhelming support back home in Minnesota, where about 90 percent of the people support importing drugs. National polls conducted by the Associated Press and AARP reveal that nearly two-thirds of Americans believe Washington should make it easier for Americans to buy drugs from Canada and other countries.

"You can't get this genie back in the bottle. It will pass sooner or later, and the FDA can either lead, follow or get out of the way," Gutknecht said.

In a March 8 letter to 16 of the largest pharmaceutical companies, AARP CEO Bill Novelli acknowledged the vital role of this research and development, but said a short-term solution is needed because seniors are not able to afford drugs.

"While importation is not a panacea, or even a long-term solution, for millions of consumers it is currently a necessity. Until we can bring costs in this country more in line with what people can afford, we ask that you join us in this effort and, at the very least, do nothing to choke off this vital lifeline," Novelli wrote.

Gutknecht's proposal has not been aired yet in the Senate, but he is hopeful that it will pass this year, and so far, it seems to be gathering support in both parties.

Sens. Trent Lott, R-Miss., Edward Kennedy, D-Mass. and John Cronyn, R-Texas, have all recently voiced their support, joining many other Senate colleagues already backing the measure.