Texas Representative Proposes Easing of Drug Imports

July 7, 2008 - 7:02 PM

(CNSNews.com) - At a time when American seniors are regularly crossing into Canada and Mexico to beat high stateside drug prescription prices, a congressman-physician from Texas has introduced a bill that proposes to ease imports on prescription drugs, bringing down prices.

"Many seniors in my district are struggling to pay for their prescription drugs, which can cost hundreds of dollars or more each month," said Rep. Ron Paul (R-TX), in a statement.

The Pharmaceutical Freedom Act (HR 3636), sponsored by Paul, would reduce prescription drug costs by providing tax credits up to 80 percent for people purchasing prescription drugs.

The bill also would make it easier for companies to import medicines into the United States or to re-import drugs that were manufactured here and shipped elsewhere.

"Ultimately, our approach would be to create a true competitive free market for drugs," said Jeff Diest, a spokesman for Paul. "It works in every other industry for every other type of good, and the reason it's not working in prescription drugs is because we have a heavily-subsidized, heavily-regulated prescription drug industry."

What stands in the way of American seniors getting their prescriptions filled at prices comparable to those in foreign countries are "absurd" Food and Drug Administration regulations, Diest said. "We should be able to have a worldwide global market because competition is what engenders lower prices ultimately," he said.

However, experts caution there are risks involved in lifting restrictions on imports of drugs manufactured in the United States and shipped abroad.

"If firms start to do that, then the drug companies will have no choice but to raise prices everywhere, in which case the Mexican consumers, for one, will lose terribly because they won't be able to afford these drugs at all," said Alex Tabarrok, research director of the Oakland, CA-based Independent Institute, a non-profit public policy think tank.

"U.S. consumers won't gain either because the Mexican consumers will no longer be helping to defray the research and development costs of new drugs," he said.

The research and development costs for a single drug can run as high as half a billion dollars. The economics of drug production obliges pharmaceutical companies to sell at a high price in developed countries and at a lower price in underdeveloped countries.

"This may seem unfair to U.S. consumers, but actually it benefits them because, if we were to only have a single price, it would either be at the high price - in which case Mexican consumers wouldn't be able to afford this medicine. If they sell at the lower price, they wouldn't bring in enough revenue to cover the R&D necessary to create the drug," said Tabarrok, who is soon to publish a book entitled American Health Care.

The manufacture and marketing of pharmaceuticals is similar to that of computer software, Tabarrok said. "It takes a lot of money to produce a software package, but once it's produced, the cost of running off another copy are low."

The excursions of seniors across borders in search of lower drug prices "serves to highlight the need to be able to import dependable drugs at less expense if you can do so, and it appears it is possible to do so," a health care expert said.

Paul, a physician, also is helping seniors in his district to avail themselves of plans by pharmaceutical companies that provide either free or low cost prescription drugs to needy seniors if they apply and qualify.

"We have assisted hundreds of people in the congressman's district to get free or reduced price prescription drugs simply by helping them go through the process of working through the drug companies," Diest said.