Tuesday, October 19, 2004

Laundering Drugs

The process seems simple enough. American drug companies sell drugs to Canada. Canadian drug companies sell those drugs back to American citizens at prices far below those available domestically. Coming out against the idea of providing drugs more cheaply to Americans seems -- well, un-American.

And rightly so. If one buys into the idea of an international free-market, it makes sense that Americans should be able to buy prescription drugs where they can be had most inexpensively, assuming similar standards of safety and effectiveness are applied to the imported drugs. All well and good.

I'm not so much against the concept of cheaper drugs for Americans, as I am against the method of achieving the goal. Let's review. Drugs made by American drug companies. Drugs sold to Canada. Drugs sold by Canadians to American citizens cheaper than they can be had in the USA, and the Canadians are still making a profit on the sale. (You didn't think the Canadians were in it for our health, did you?)

In all the debates about whether to legalize the institutional re-importation of drugs from Canada, one question seems to be consistently left out there on the cold, hard Canadian tundra. Why are drugs so much cheaper in Canada?

Look at the process again. We're adding a middleman, but it's still cheaper. What gives? Does capitalism have screw loose? Is that damned Invisible Hand messing with the Established Order?

Not at all. Capitalism's working just fine. You see, when Canada buys drugs, Canada is bargaining with the purchasing power of about 30 million Canadians. Hey, Merck. Wanna sell drugs to this big market? Meet our price, or maybe Glaxo has something that'll work as well, for less. Or maybe we don't buy anything from you this year. How's that gonna look on the old quarterly report?

Canada can do this because it has a single-payer system of health care. Meanwhile, here in America, our population of 285 million people are sliced and diced into so many tiny insurance groups that drug companies are, by comparison, economic behemoths with the power to bargain their prices upward.

Big fish in a small pond. Let's say we turn that pond into an ocean, with 285 million paying customers. Think the prices will still stay high? Or would Canadians start agitating for a piece of our action?


Blogger Maines said...

There's one big purchaser of prescription drugs in the U.S.--the biggest insurer in the U.S., as it happens--who could exert some pressure to negotiate good prices on drugs: Medicare.

Oops, the new act forbids Medicare from doing that very thing. Gee, wonder why that is? No? Me neither.

6:40 PM  

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