Turned up to eleven: Fair and Balanced

Thursday, July 31, 2003


Drugs, Sex, Rock and Roll (well, maybe just drugs)
I really don't understand the Big Pharma argument against "drug reimportation" from Canada. Of course, I understand why they are fighting it, but I really don't understand the method they are using. The big public argument is a basic scare tactic "Drugs from Canada aren't approved by FDA, you might die from contaminated meds" or some such. Riiiiight... like all those poor Canadian saps who keep keeling over from the cyanide in their Lipitor, huh? Give me a break. Canadians don't live in thatched roof huts, they don't ride to work on stagecoaches, drugs sold there are exactly the same as drugs sold here, in terms of quality. Basically, they have a national medical service that can fix the price lower than the "market" (I'll explain the scare quotes) here. So the price is cheaper there, and thanks to the internet and rapid shipping worldwide, the low price drugs can be accessed here, too. This seems to me like the free market in action. The very large buyer (Canada) can negotiate a lower price. Essentially, American consumers are "free riders" on this particular transaction.
So, why did I put the "scare quotes" "around" "market"? Well, basically, the market in medical care in the US is extremely dysfunctional, as anyone with an ounce of common sense can tell. We have a cumbersome insurance industry that charges very high prices for poor coverage, a public health care system obliged to care for the uninsured sick, and pass the cost on to the taxpayer, and, fundamentally, medical device and drug industries that get monopolies, and thus can charge what they will, on the products they make, for a number of years. Finally, you have consumers who are in no position to bargain as they are told they will die without this medicine/operation/device. So it stretches credulity to argue that US "market" prices are "fair", while Canadian or European prices are "artificially low".
This is all the product of globalization, as people in the US become aware that they are paying far more for health care than other people, and that they have access to cheaper meds. So, regardless of Congressional grandstanding, Big Pharma (and Little Pharma) is going to have to deal with losing the ability to set high prices in their wealthiest market. How to respond? First of all, the notion that this will kill innovation is laughable. Innovation occurs on University campuses and at start-up biotechs, not at GlaxoSmithKline (I exaggerate, but I am mostly right). Simply put, drug discovery is hugely subsidized both on the front end (by NIH) and on the back end (by 7 year monopolies on the drug). So reducing the back end subsidy (they may still have the monopoly, but can't set the high price) will have no effect on innovation (they may have to cut their advertising budgets, though.
There is a fundamental conundrum here, though. On the one hand, it is important that new drugs be discovered and used to fight disease. However, it is also important that those drugs be available to the consumers who need them, and that people are not deprived of treatment because of poverty (example: HIV, TB, Malaria in Africa compared to high blood pressure in the developed world). The profit motive provides an incentive to develop drugs to treat disease in people who can pay for it, rather than those who need it most.

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