NCPA - National Center for Policy Analysis

Reimportation Could Spur Reform

May 11, 2004

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.

Source: Editorial, "Freeload Factor," Investor's Business Daily, May 10, 2004 and "Would Prescription Drug Importation Reduce U.S. Drug Spending?" Congressional Budget Office, April 29, 2004.

 

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