Tuesday, May 8, 2007

An American Poison Pill

You may get poison pills from America (see Vioxx), but you won’t even have the unlikely chance to get them from Canada anytime soon… at least not legally throughout the US. A large piece of legislation has been moving its way through the US Senate. Its purpose is to improve drug safety standards here in the US (see Vioxx again). To this bill was attached an amendment by Sen. Byron L. Dorgan (D-ND) to allow US citizens to import drugs from facilities in Canada, Australia, New Zealand, Japan, and the EU. These are all most certainly so-called First World nations, with sophisticated scientific communities and long-standing drug safety laws on the books. Even noting that, however, such facilities would have to have been certified by the US FDA to take part in any programs formed under the bill. The goal was to provide Americans with an alternative source for many medications at savings that experts estimate would likely range between 20 and 50 percent. So, at first blush, you might imagine just how much US pharmaceutical companies like this idea. They responded by opening the wall safe and choosing a bought-and-paid-for Senator to champion their cause.

Sen. Thad Cochran (R- Miss) attached a rider to the amendment that would have required individual imports be certified as safe by the FDA. There you have it… we-hate-big-government Republicans (see “yeah right”) putting forth a program to add the requirement for individual inspectors for individual drug shipments into America. They couched all of this in “protecting the health and well being of our citizens” of course – ignoring the safeguards already noted above – but it was the poison bill that killed Sen. Dorgan’s amendment. Meeting Sen. Cochran’s demands would be far too costly a burden for the country to shoulder (see US national debt). Since the rider could not be stopped under chamber rules and since the larger piece of legislation could not be jeopardized – it actually would add further protection for Americans – the amendment was voted down by the chamber as a whole. End result: Pfizer et al get their protection, Sen. Cochran protects his campaign chest (and is put gently back into the wall safe until he’s needed again), and Americans get screwed. Read more about it in the LA Times.

The interesting thing about this whole affair is that a Boston University study released in 2004 found that such imports had virtually no negative affect on the economic interests of American pharmaceutical companies. Indeed, the industry might actually make more money. The study was noted in a Boston Globe article by Christopher Rowland.

Boston University researchers say they have found a big hole in the pharmaceutical industry's argument that cheap prescription imports from Canada would hurt profits that fuel critical research for new drugs.

The BU analysis, to be released today, says that drug companies may break even or actually make profits on Canadian imports because the lower-priced imports would spur new prescriptions. If true, that could leave research budgets intact.

Key to the equation is the balance between new drug sales and sales that are simply shifted to Canadian sources from US pharmacies. If more than 44.5 percent of the Canadian imports represent new prescriptions, then drug companies come out ahead, said Alan Sager, a professor at the Boston University School of Public Health and co-author of the study.

"When you lower prices, people buy more drugs," he said. "Drug makers tremble and say publicly that importing drugs from Canada cripples their profits, but our analysis shows that if a reasonable share of the drugs that Americans import from Canada are new prescriptions, then drug makers' profits remain stable or could even increase."

It is a safe assumption that new orders will account for a large portion of sales, Sager said, because Canada offers such deep discounts. Many elderly people with no prescription insurance coverage could not afford drugs in the United States, but they can buy them for the first time from Canadian Internet pharmacies, he said.

Certainly, economies don’t stand still and two years have passed. However, it provides more food for thought about just what the CEOs of these companies actually do to warrant $100 million a year?

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