Tuesday, May 11, 2004
Reimportation unlikely to reduce costs, but could lead to reform
["Reimportation Could Spur Reform," Daily Policy Digest, NCPA, 11 May 2004.]
Allowing drug reimportation from Canada will only have a minimal affect on prices, but according to the Congressional Budget Office, the move might force other countries to cave in on their price controls:
Legalizing the reimportation of prescription drugs from low-cost venues such as Canada would cut U.S. drug prices only a bit and would have little impact on the drug industry's profits, according to a report by the Congressional Budget Office.
The CBO also found:
- The cost of patented prescription drugs is indeed lower -- 35 percent to 55 percent lower -- in other industrialized countries than in the United States.
- However, reimportation from Canada alone would hardly make a difference, and that re-importing from a broad range of developed countries might save $40 billion in 10 years, or 1 percent of U.S. drug spending.
- If importation is legalized, both foreign governments and drug firms would move to limit supplies to other countries, and drug firms might charge foreign governments more to ensure an adequate margin on drugs reimported to the United States.
Thus, if nothing else, lowering the barriers to drug reimports might give drug firms reason to make foreign buyers pay something closer to their fair share, says Investor's Business Daily.
[See the archived blog entry, "The positive unintended consequences of allowing reimportation," 25 February 2004.]
["Reimportation Could Spur Reform," Daily Policy Digest, NCPA, 11 May 2004.]
Allowing drug reimportation from Canada will only have a minimal affect on prices, but according to the Congressional Budget Office, the move might force other countries to cave in on their price controls:
Legalizing the reimportation of prescription drugs from low-cost venues such as Canada would cut U.S. drug prices only a bit and would have little impact on the drug industry's profits, according to a report by the Congressional Budget Office.
The CBO also found:
- The cost of patented prescription drugs is indeed lower -- 35 percent to 55 percent lower -- in other industrialized countries than in the United States.
- However, reimportation from Canada alone would hardly make a difference, and that re-importing from a broad range of developed countries might save $40 billion in 10 years, or 1 percent of U.S. drug spending.
- If importation is legalized, both foreign governments and drug firms would move to limit supplies to other countries, and drug firms might charge foreign governments more to ensure an adequate margin on drugs reimported to the United States.
Thus, if nothing else, lowering the barriers to drug reimports might give drug firms reason to make foreign buyers pay something closer to their fair share, says Investor's Business Daily.
[See the archived blog entry, "The positive unintended consequences of allowing reimportation," 25 February 2004.]
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