Wednesday, October 06, 2004

Drugs from Canada

ButterflyIn the Vice Presidential debate last night, John Edwards detailed the Kerry-Edwards health care plan, stressing, among other points, their intention to allow drug importation from Canada:

They've blocked allowing prescription drugs into this country from Canada. We're going to allow it.


Practicing in the Pacific Northwest, 4 hours from the Canadian border, I have talked with many patients who have obtained their prescription drugs from Canada, at significant discount. I also have a few patients who have purchased drugs cheaply in Mexico. The appeal is obvious, and the logic can be hard to refute. Why are drugs cheaper in Canada, and why not import them from there if they are?

The reasons for less expensive Canadian drugs are severalfold. Prescription drugs still on patent are price-controlled in Canada at the wholesale level by the Patented Medicine Prices Review Board (PMPRB), which sets the price of all new patented medications. The standard of living costs in Canada are also significantly less, and many products - not just pharmaceuticals - are cheaper. Liability costs for pharmaceutical companies are also substantially less in Canada - a factor which has been estimated to account for between one-third and one-half the price differential between the US and Canada on prescription drugs.

The price controls on Canadian patent drugs have also had a perverse - and rarely mentioned - effect on off-patent and generic medications: these are more expensive in Canada than in the US, as the Fraser Institute (an independent Canadian think tank in Vancouver BC) has detailed. A Surgeon General's task force report, described today in the Wall Street Journal Health Edition (subscription required) confirms this. Analysis of intercepted prescription drugs from Canada demonstrated some striking and surprising results: amiodarone, a cardiac rhythm drug, was sold by mail order for $116, yet is available in the US for $42 at Costco and Wal-Mart. Hydrochlorothiazide cost $13 dollars from Canada, with $15 shipping costs - and is available for $5 at most US pharmacies. Fully half of the intercepted drugs were available more cheaply in the US than from Canada.

Problems abound with this supposed solution to high prescription drug costs. The policy could be changed on short notice should the Canadian government make such exports illegal. Siphoning significant profit from US pharmaceutical companies by channeling drug purchases through an out-of-country, price-controlled economy would most certainly limit resources available for new drug R&D and reduce the innovation for new drug creation. And then there is the problem of quality control and potential fraud.

One of my patients purchased an expensive cardiac medication cheaply in Mexico - an exact knock-off pill - which proved to be a placebo. Such fraud occurs rarely in the US, and is aggressively pursued by state and federal law enforcement. Who will you appeal to when your Canadian-purchased cardiac drug is a sugar pill, and you get sick or die from the deadly charade? Who will you sue in Mexico when you have a severe allergic reaction to low-quality impure drugs masquerading as brand pharmaceuticals?

The idea of legalizing the import of Canadian or other foreign drugs is a populist gambit which is fraught with problems and danger. It is a prescription for our health care best avoided.