Reimportation Would Undermine Life-Saving Innovation
We all know the American people are living longer and healthier lives than ever before. That sounds great, but look behind the platitudes. Every time a breakthrough drug is announced, it changes the lives of real people who are suffering or dying from some ailment. In terms of the day-to-day, life-changing impact of technology, the progress made over the past twenty years in fighting the myriad killer cancers is one of the greatest achievements we have made. And that is just one disease.
But, the "business" of pharmaceutical drugs and biotechnology cannot rest on the advances we already enjoy. There are millions of Americans today praying that someone, anyone, finds a cure to the specific disease that threatens to take away their mom or dad, son or daughter, grandparent or grandchild. The list of unconquered maladies and diseases is endless - Parkinson's, AIDS, diabetes, schizophrenia, and depression, etc. Real people are depending on scientists, researchers, and yes, pharmaceutical, biotech and medical device companies to find these cures.
This is why the real world stakes could not be bigger as Congress considers the popular but utterly irresponsible proposal to import price-controlled drugs from Canada and other countries. Of course, who would not want lower prices on drugs? But the reality is that Canada and European countries are "free riders" on our market system, taking advantage of cures developed because Americans pay the true price of innovation. That free riding is wrong, and proposals to import price controls into America would threaten that innovation and ultimately deprive consumers everywhere of the life saving cures our markets produce.
Canada, France, Germany, and other wealthy nations with nationalized health care systems that use price control regimes, force biotech and drug companies to sell their cures at prices far below where they recoup their research costs. One reason American drug companies simply do not stop selling their drugs in those countries is that international trade law allows a country, like Canada, to basically steal the patent of any company refusing to sell at the socialized health care price. Obviously those rules are unfair and wrong, but today those are the rules of the game.
We must keep in mind that foreign price controls abroad hurt American patients here at home. There are two clear impacts. First, we alone carry the burden of paying the price for research into new cures. Why? Because our nation is the only one which utilizes a free market system to drive investment, entrepreneurship and innovation into life-saving pharmaceutical and biotechnology products.
Second, there is less investment in new cures than there would be if wealthy Europeans, Canadians and Japanese paid a market rate for drugs. This is a key point, because this is about curing diseases. For example, drug research and development in the United States shot up 500% in the last decade, while in Europe it only doubled. That fact is reflected in the number of new drugs developed. From 1998-2002, U.S. companies launched 88 new drugs versus 44 in Europe. That's an astounding reversal in innovation based on the previous five years when Europe launched 81 new drugs compared to only 48 in the United States.
If we import the price control systems of those countries, the last major free market in medicines vanishes. Not only would America get all the ill effects the price controlled nations see today, but the entire cure-creating system would be weakened. Every industrialized nation in the world is leeching life-saving breakthroughs from our health care market. If that last market succumbs to price-capped imports, America's search for new cures will slow to a crawl as it has in those countries with price controls.
We all want affordable medicines and an ongoing stream of new cures. Reimportation of drugs will not accomplish this. The only answer that accomplishes both is to insist that our neighbors to the north - as well as our wealthy trading partners in Europe and Asia - pay their fair share.
