President Obama has urged lawmakers to legalize the importation of prescription drugs from abroad. Advocates claim importation would lower drug costs by giving Americans access to the cheaper medicines available overseas.
In truth, though, drug importation would harm Americans' health and jeopardize future developments in medical science.
Many countries don't adhere to the same rigorous safety standards as the United States. So there's a serious danger that foreign drugs are counterfeit or poorly produced. Africa and Asia are ground-zero for the counterfeit trade. For example, a 2002 study in Senegal found that 21 of 22 samples of ampicillin, the common antibiotic, contained only flour.
Third World counterfeits often make their way to First World shores. Europe's system of "parallel trade" allows drugs to freely cross borders. Middlemen in each country can open and repackage drug shipments before sending them along. Such a system makes it easier for counterfeits to enter the supply chain. Last year, European officials seized more than 34 million fake pills in just two months.
Tracking and scanning technology is improving, though, as is supply-chain management. So regulators may one day be able to protect consumers. But even then, importation will be a flawed policy.
Canadians and Europeans pay less for certain brand-name drugs because their governments impose price controls. If a drug company refuses to sell at the price the government demands, then the government often threatens to break the company's patent. By importing these drugs, Americans would effectively be importing price controls. This would hamstring medical research.
Developing a new drug is costly. On average, it takes 15 years and $1.3 billion to bring a new drug to market. For every 10,000 compounds tested, only five ever make it to clinical trial. Of those five, only one is ever approved. By paying higher prices for brand-name drugs, Americans bankroll the lion's share of these research efforts. This isn't fair, but it's reality.
Rather than impose backdoor price controls through importation, U.S. lawmakers should pressure foreign governments to relax their price controls and shoulder more of the research burden.
Legalized drug importation has long seduced politicians and consumers alike. But its negative consequences for patient safety and pharmaceutical research are too significant to ignore.
Roger Bate is the Legatum Fellow in Global Prosperity at AEI.