Importing Government

As Congress diddles with a Medicare prescription-drug plan, citizens are busing and clicking their way to Canadian pharmacies, where drugs are affordable. U.S. politicians, refusing to control drug prices, are also flocking to Canada for help by endorsing what's euphemistically called "reimportation." But make no mistake: What we are really importing from Canada is effective government regulation.

Spurred on by tax breaks, patent protections and deregulation, the pharmaceutical industry keeps inventing a bounteous pharmacopoeia that ever fewer Americans can afford. Caught between popular pressure to lower drug prices and industry pressure to preserve profits and free markets, the Bush administration came up with voluntary drug discount cards for senior citizens. But the cards have bewildering eligibility rules and offer only modest savings. As a recent General Accounting Office report found, the cards reflect and perpetuate the massive price discrimination in the drug business. Manufacturers give huge discounts to large purchasers -- Medicare, Medicaid, the Department of Veterans Affairs, HMOs and now discount-card companies -- while gouging the tens of millions of people without effective drug coverage.

Faced with the default of the U.S. government, Congress wants to import drug policy along with drugs. In July, the House of Representatives, with broad Republican support, passed a bill to allow citizens and retail pharmacies to import drugs from Canada. Unlike the counterpart Senate-passed bill, the House doesn't require the Food and Drug Administration to bless imported drugs as safe. What a great free ride for the United States: Let other governments do the hard work of regulating the American drug industry while our politicians keep their blinders on.

How does Canada keep its drug prices so much lower than ours? First, as Canadian economist Steven Morgan points out, Canadian prices aren't lower than the prices American bulk purchasers typically pay. They are significantly lower than the inflated prices Americans without drug coverage pay. Second, Canada uses government muscle instead of market muscle to keep drug prices tolerable -- for everyone. Canada's federal Patented Medicine Prices Review Board limits prices for new breakthrough drugs to the median rate charged in seven industrial countries, and it pegs other patented drugs to these prices. Third, provincial governments add their own controls. Ontario, for example, permits new drugs into its formulary only if they meet price criteria, while Quebec refuses to pay more for its drugs than the best available price in the rest of Canada.

Meanwhile, the reimportation fix is spreading like crack cocaine. In July, the mayor of Springfield, Mass., launched a program to encourage city employees to purchase their drugs from Canada, saving the city money. Springfield skirted the federal ban on buying and reselling pharmaceuticals from abroad by having individual employees do their own purchasing. Buoyed by Springfield's apparent success (the Department of Justice went after it in September), other city and state governments began exploring how they, too, might help themselves and their citizens in the face of federal government abdication.

The reimportation issue creates a curious alliance between liberals, fiscal conservatives and libertarians. For liberals, opening the Canadian drugstore to American patients is a way to import at least one positive spin-off of Canada's national health insurance: affordable drugs. City and state officials see budget savings in reimportation, and, perhaps, even enhanced local government capacity. Springfield Mayor Michael Albano, fed up with suggestions that he was compromising his citizens' safety with imported drugs, countered, "[A]s mayor, I cannot guarantee my citizens safety with fewer police and firefighters." And while conservative business allies have sided with Big Pharma against reimportation, the pro-import folks invoke free-trade rhetoric, access to world markets and consumers' rights to seek best prices.

For decades conservatives have been promising that if only government gets off corporate backs, free enterprise will make life better for everyone. Republicans, abetted by New Democrats, have so gutted government that Americans are now dependent on other governments to keep us secure. With prescription drugs, most foreign governments do a better job securing the welfare of their citizens by structuring a healthy relationship between business and the rest of society. In strapping itself to industry and ideology, the U.S. government has literally sacrificed its independence, not only from big business but from foreign rule as well.