As discussions around healthcare
reform continue to saturate Capitol Hill, the debate on
whether to seek importation of prescription drugs from other
countries remains a hot topic inside and outside the reform
debate. This is a subject that has been a hot button for
legislators long before the Obama administration took office,
and now pressure is mounting from both sides to either make it
a reality or suppress the idea altogether. Supporters
state that importing (or re-importing) less-expensive
pharmaceuticals from other nations such as Canada will
directly lead to lower prescription drug costs for
Americans. However, opposing parties claim that such
measures would not only introduce counterfeit or ineffective
drugs into the domestic market, but also jeopardize the U.S.
pharmaceutical industry itself – and deciding where to draw
the line on this issue is becoming a tough call for the
federal government.
White House Remains
Supportive
President Obama has long championed the
idea of prescription drug importation as a key component to
lowering overall healthcare costs in the U.S., and despite
recent efforts to remove it from the healthcare reform
legislation currently under consideration, his administration
remains firm on plans to move forward with such initiatives
outside the current reform bill. Senate amendments that
would have paved the road for pharmaceutical importation were
quashed in mid-December among concerns over drug safety and an
earlier deal struck between the Obama administration and U.S.
drug manufacturers. However, the President later reassured constituents
that he is committed to allowing importation of
pharmaceuticals from certain countries once the safety
concerns brought by the Federal Drug Administration have been
properly addressed. The only problem is: the FDA’s
concerns aren’t the only fly in the ointment.
Concerns of Price
Controls
While the FDA’s concerns over safety and
implementation have significantly factored into the
encumbering of prescription drug importation measures, the
main detractor has been the case made by the Pharmaceutical
Research and Manufacturers of America (PhRMA). While the
PhRMA also supported the FDA’s concerns over safety, it also
argued that importation is an indirect method of price
controls that could cripple the U.S. pharmaceutical
industry. Price controls on prescription drugs would
have a cascading effect where decreased profits would cause
investors to jump ship, leaving the industry with a lack of
capital and incentive to create new technologies – and that,
according to analysts, translates into a significant loss of
U.S. jobs and innovations from the pharmaceutical
sector. According to 2006 study by University
of Connecticut finance professors Joseph Golec and John
Vernon, such measures would
mean lower pharmaceutical price inflation, but also “974 fewer
new medicines and 1,578,081 lost job years in the
future.”
Walking the Fine
Line
There is little doubt that Americans can
benefit from getting prescription drugs from outside the
country at significantly lower prices. However,
addressing the safety and implementation concerns involved may
not be enough to balance the industry concerns of unemployment
and reduced innovation due to price controls. In June
2009, the Obama administration did reach an agreement with the
pharmaceutical industry, which bound manufacturers to
contribute $80 billion over the next 10 years to help lower
the cost of medications. But continued pushes of
prescription drug importation may cause the PhRMA to drop its
support of healthcare reform legislation altogether, causing
more tension around the bill’s prospects. Such is the
dilemma our government faces in addressing the prescription
drug cost issue – and it is certainly difficult to tell how it
will turn out over the coming months.
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