NCPA - National Center for Policy Analysis

Reimporting Drugs Unlikely to Lower Costs

July 29, 2003

A new Congressional Budget Office (CBO) report on the Medicare reform bills passed by the House and Senate says that provisions easing restrictions on reimporting drugs from Canada will not likely lower drug costs in the United States.

There are several reasons for this:

  • The bill requires the head of the Food and Drug Administration to certify the safety of drug reimportation programs, and FDA Commissioner Mark McClellan has already said he will not do that.
  • But even if reimportation was opened up, manufacturers of name-brand prescription drugs are unlikely to increase sales in Canada enough for a significant share of their products to be reimported to the United States.
  • Canada's market is much smaller than in the United States; thus prices would be more likely to rise by more in Canada than the amount by which they would fall in the United States.

Other provisions of the Medicare bills would lower drug costs by an estimated $7 billion per year by reducing delays on generics drugs entering the market.

Source: Julie Rovner, "CBO Study: 'Reimportion' Not Likely to Lower U.S. Costs," Congress Daily, June 23, 2003; "H.R. 1 Medicare Prescription Drug and Modernization Act of 2003 and S. 1 Prescription Drug and Medicare Improvement Act of 2003," Congressional Budget Office, July 22, 2003.

 

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