Free Trade For Prescription Drugs

The FDA has been unable to show that medicines bought from exporting countries, such as Canada, Germany, Britain, or Switzerland, hurt American consumers. Yet, serious doubts have been raised about the trade in prescription drugs by uncontrolled American and foreign internet pharmacies that do not even require a physician's prescription.

A study by the Kaiser Family Foundation showed that research and development took no more than 14 percent of America's pharmaceutical companies' revenues. Yet, they set aside 24 percent for profits. In 2000, Fortune magazine ranked pharmaceuticals as America's most lucrative industry with profits of $28 billion.

The cost of prescription drugs in the U.S. is further increased by the industry's record expenses for advertising, not only to physicians but also to consumers. The Washington Post recently reported that product advertising actually costs the industry more than research and development.

As if physicians need help with their prescription decisions, numerous drug makers urge consumers to ask their doctors if their particular brand "may be right" for them. That's how Pfizer, for example, spent $89.5 million plugging Viagra to consumers. Little do the advertisers care that their heavy-handed huckstering may have the effect of overmedicating their more gullible customers.

It is simply not true that government-imposed price controls are necessary to give the consumer lower prices for prescription drugs. The companies and cooperatives that buy the largest quantities always pay less, in the U.S. and elsewhere, than the individuals who can purchase only from retailers.

As long as the drug manufacturers hold the patents for their products, they enjoy monopoly powers. All the more should governments be free to negotiate prescription drug prices with manufacturers for the benefit of the weakest buyers in the market, the individual consumers.

Regrettably, too many politicians in our society are beholden to the pharmaceutical companies, rather than to the consumers, and are therefore not inclined to advocate negotiating drug prices between government and the industry.

Although the earnings margins for their drugs are smaller in other countries, U.S. manufacturers still profit from their exports. Unprotected from foreign price competition, they may well find it opportune to lower their domestic prices just enough to make drug re-importation unattractive.

If Congress wants open markets worldwide, it cannot legislate more barriers to trade than already exist. America's pharmaceutical industry can easily absorb moderately lower prices and still be successful in its research and development by moderately curtailing its profit margins and its excessive advertising.

Illinois Governor Rod Blagojevich is on the right track. Once he goes through with his proposal to buy up to $90 million worth of prescription drugs for state employees from Canada, he might want to offer American drug manufacturers the choice of price negotiations.

Wolf D. Fuhrig	Home	11-02-03
Free Trade For Prescription Drugs
The vote was 243 to 186 when the U.S. House passed the bill assuring Americans of their right to import prescription drugs from abroad. Rep. Rosa DeLauro (D., Conn.) spoke for the majority: "It is time that this Congress stop acting as a wholly owned subsidiary of the pharmaceutical companies and step up to its responsibility to the consumers of this nation." The opponents to the bill, including the Wall Street Journal, the Washington Times, the Heritage Foundation, and Americans for Tax Reform, focused upon three main objections:
the Food and Drug Administration (FDA)'s warning that medicines re-imported from other countries may be adulterated, sub-potent, or counterfeit, the need to assure America's pharmaceutical industry of the income required for its research and development, and the unfairness of importing drugs from countries that control prices.
The FDA has been unable to show that medicines bought from exporting countries, such as Canada, Germany, Britain, or Switzerland, hurt American consumers. Yet, serious doubts have been raised about the trade in prescription drugs by uncontrolled American and foreign internet pharmacies that do not even require a physician's prescription. A study by the Kaiser Family Foundation showed that research and development took no more than 14 percent of America's pharmaceutical companies' revenues. Yet, they set aside 24 percent for profits. In 2000, Fortune magazine ranked pharmaceuticals as America's most lucrative industry with profits of $28 billion. The cost of prescription drugs in the U.S. is further increased by the industry's record expenses for advertising, not only to physicians but also to consumers. The Washington Post recently reported that product advertising actually costs the industry more than research and development. As if physicians need help with their prescription decisions, numerous drug makers urge consumers to ask their doctors if their particular brand "may be right" for them. That's how Pfizer, for example, spent $89.5 million plugging Viagra to consumers. Little do the advertisers care that their heavy-handed huckstering may have the effect of overmedicating their more gullible customers. It is simply not true that government-imposed price controls are necessary to give the consumer lower prices for prescription drugs. The companies and cooperatives that buy the largest quantities always pay less, in the U.S. and elsewhere, than the individuals who can purchase only from retailers. As long as the drug manufacturers hold the patents for their products, they enjoy monopoly powers. All the more should governments be free to negotiate prescription drug prices with manufacturers for the benefit of the weakest buyers in the market, the individual consumers. Regrettably, too many politicians in our society are beholden to the pharmaceutical companies, rather than to the consumers, and are therefore not inclined to advocate negotiating drug prices between government and the industry. Although the earnings margins for their drugs are smaller in other countries, U.S. manufacturers still profit from their exports. Unprotected from foreign price competition, they may well find it opportune to lower their domestic prices just enough to make drug re-importation unattractive. If Congress wants open markets worldwide, it cannot legislate more barriers to trade than already exist. America's pharmaceutical industry can easily absorb moderately lower prices and still be successful in its research and development by moderately curtailing its profit margins and its excessive advertising. Illinois Governor Rod Blagojevich is on the right track. Once he goes through with his proposal to buy up to $90 million worth of prescription drugs for state employees from Canada, he might want to offer American drug manufacturers the choice of price negotiations.

Wolf D. Fuhrig

Home

11-02-03

Free Trade For Prescription Drugs