October 28, 2003

Prescription drugs for Canadians  

Eight Forty-Eight had another story this morning on the Blagojevich plan to reimport prescription medications from Canada, and I have to respond. While I sympathize completely with the desire to drive down prices so medications can be available to all Americans, I just can't get over the gross dishonesty of this plan.

The whole thing is predicated on a flawed understanding of how prices work. There's a reason drug companies sell drugs for one price in Canada and another in the United States, and it doesn't have anything to do with the drugs themselves. For better or for worse, prices are in equilibrium - which means that you can't just start buying your drugs elsewhere without affecting the prices. If a block of customers the size of, say, the Illinois payroll starts buying drugs in Canada, drug companies will simply increase the prices there.

What does this mean? For one thing, estimates of the potential savings to the state are grossly exaggerated because they don't take into account the drug companies' inevitable reaction. Also, the plan will push prices up for Canadians, which seems downright diabolical.

But what's most disturbing about the plan is the fact that it completely fails to address structural problems in both our healthcare system and the pharmaceutical industry. Instead it opts for a quick fix that won't even fix anything, at the expense of our neighbors - who, by the way, have their house in order. When are we going to see someone step forward and show some real political backbone on this issue?

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