Monday, February 07, 2005


Clearly, allowing US consumers to re-import price-controlled drugs from Canada, etc. runs contrary to the needs of the free market and -- all together now -- depresses the incentives for pharmaceutical research.
Just as clearly, disallowing re-importation effectively places close to 100% of the cost of such research on US consumers.
How can the issue be intelligently debated without a discussion of the other contra-free-market influence at work here: patent protection for drugs?
Is it not useful to consider whether the length and scope of patent protection for drugs is appropriate? After all, absent patent law, the price of any new drug would fall due to generic knock-offs becoming available much sooner than is the case now.
Of course, the lack of patent protection would depress research incentives as well, likely more so that allowing re-importation.
Maybe one way to look at is that the single-payer systems in other countries are a rational response to the time-limited state-enforced monopolies that patents provide. Selling drugs to such government providers at a negotiated price (as opposed to the fiat price a monopolist can set) is the cost to the drug makers of having other countries respect US and international patents.
The research needs to get done. However, given that patent protection compromises the operation of the free market, isn't it mandatory that our government take some steps to 1) try and shift some of that burden off of the US economy and 2) making sure that patent protection does not increase the cost of drug development versus what would exist if there were no patents.
"That's just what it costs" and "Drug makers have a right to monopoly profits during the patent period" just don't cut it. And I simply don't believe that the current system (assuming disallowance of re-importation) produces the best results we can hope for. I don't advocate a free lunch, but I'm concerned about the government holding a gun to my head while the drug makers take a bite out of my sandwich.
Of course, it's pure fantasy to imagine the current administration doing anything fundamental about this problem.