Thursday, January 13, 2005
Short-term and long-term goals for importation
[Jude Blanchette, "Reimportation of Medicines: Free Trade Is the Issue," Foundation for Economic Education, 12 January 2005.]
There is some truth in Jude Blanchette's recent criticism that some conservative and libertarian thinkers seem perhaps overly eager to jettison free markets when it comes to prescription drug reimportation:
The Heritage Foundation stated, “[The HHS] conclusions are a stunning vindication of the economic and safety arguments that opponents of importation have been making since the beginning.” Kevin A Hassett of the American Enterprise Institute proclaimed, “It might still be fashionable to support reimportation, but the [Commerce Department] study makes clear that it would be economically indefensible.” And one thing is expressly clear to the libertarian Competitive Enterprise Institute (CEI), “[W]hen we reimport drugs from foreign countries, we are actually importing their price controls.” Writing on the National Review website last week, Robert Goldberg of the Manhattan Institute thought the HHS report “a welcome breath of fresh air in the increasingly stale debate over drug importation.”
With few exceptions, it seems as though the entirety of the conservative movement and even some libertarians have come down in favor of a ban on pharmaceutical reimportation. This is unfortunate. Reimportation is nothing more than free trade in pharmaceuticals, and there are no good grounds for the U.S. government’s interfering with it.
The reality, though, is arguably a bit more complicated, as most problems become when government interferes with the marketplace. While it is true that wide open borders should no more be barred for pharmaceuticals than they should be for any other product, there is a difference between immediate and longer-term policy goals. In the case of reimportation, it is certainly the case that there are legitimate concerns over the safety of drugs - whether imported or domestic - given the existence of a government agency that has assured the public of the safety of pharmaceutical products for many years.
As well, it is worth noting that politicians who bolster their careers based on touting the potential benefits of reimportation schemes do so within the context of significant regulation of distribution and/or price either here or abroad, and thus rest their arguments on the disingenous foundation that these regulations will be able to continue in their current form once significant reimportation begins. If a restaurant offers a senior discount and all its customers go to great lengths to pretend to be seniors, then that restaraunt will either cease offering the discount, inflate its prices, or close up shop. It's hard to determine who wins in any of those scenarios, yet that is exactly what will take place should reimportation continue to expand its scope under the current regulatory environment.
Thus, while it is important to avoid reimportation as it is currently fashioned, free trade is the ultimate goal. Removing the barriers to the success of that trade begins with dismantling a regulatory regime that undermines consumer awareness and cannot deliver on its promises. Blanchett concludes with a similar diagnosis:
[R]eimportation is largely the byproduct of the regulatory state in which the FDA is forces an $800 million compliance cost on drug developers. It is here that our energies should be focused.
[Matthew Hisrich, "Sebelius Is Practicing Black-Market Politics," The Wichita Eagle, 10 December 2004.]
[Jude Blanchette, "Reimportation of Medicines: Free Trade Is the Issue," Foundation for Economic Education, 12 January 2005.]
There is some truth in Jude Blanchette's recent criticism that some conservative and libertarian thinkers seem perhaps overly eager to jettison free markets when it comes to prescription drug reimportation:
The Heritage Foundation stated, “[The HHS] conclusions are a stunning vindication of the economic and safety arguments that opponents of importation have been making since the beginning.” Kevin A Hassett of the American Enterprise Institute proclaimed, “It might still be fashionable to support reimportation, but the [Commerce Department] study makes clear that it would be economically indefensible.” And one thing is expressly clear to the libertarian Competitive Enterprise Institute (CEI), “[W]hen we reimport drugs from foreign countries, we are actually importing their price controls.” Writing on the National Review website last week, Robert Goldberg of the Manhattan Institute thought the HHS report “a welcome breath of fresh air in the increasingly stale debate over drug importation.”
With few exceptions, it seems as though the entirety of the conservative movement and even some libertarians have come down in favor of a ban on pharmaceutical reimportation. This is unfortunate. Reimportation is nothing more than free trade in pharmaceuticals, and there are no good grounds for the U.S. government’s interfering with it.
The reality, though, is arguably a bit more complicated, as most problems become when government interferes with the marketplace. While it is true that wide open borders should no more be barred for pharmaceuticals than they should be for any other product, there is a difference between immediate and longer-term policy goals. In the case of reimportation, it is certainly the case that there are legitimate concerns over the safety of drugs - whether imported or domestic - given the existence of a government agency that has assured the public of the safety of pharmaceutical products for many years.
As well, it is worth noting that politicians who bolster their careers based on touting the potential benefits of reimportation schemes do so within the context of significant regulation of distribution and/or price either here or abroad, and thus rest their arguments on the disingenous foundation that these regulations will be able to continue in their current form once significant reimportation begins. If a restaurant offers a senior discount and all its customers go to great lengths to pretend to be seniors, then that restaraunt will either cease offering the discount, inflate its prices, or close up shop. It's hard to determine who wins in any of those scenarios, yet that is exactly what will take place should reimportation continue to expand its scope under the current regulatory environment.
Thus, while it is important to avoid reimportation as it is currently fashioned, free trade is the ultimate goal. Removing the barriers to the success of that trade begins with dismantling a regulatory regime that undermines consumer awareness and cannot deliver on its promises. Blanchett concludes with a similar diagnosis:
[R]eimportation is largely the byproduct of the regulatory state in which the FDA is forces an $800 million compliance cost on drug developers. It is here that our energies should be focused.
[Matthew Hisrich, "Sebelius Is Practicing Black-Market Politics," The Wichita Eagle, 10 December 2004.]
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