Don’t le­gal­ize drug im­ports; that’ll harm Texas’ econ­omy

Austin American-Statesman - - VIEWPOINTS -

Pres­i­dent Don­ald Trump prom­ises to help lower Amer­ica’s pre­scrip­tion drug bills. How? By al­low­ing pa­tients to buy medicines from over­seas phar­ma­cies.

Though in­tended to help every­day Amer­i­cans, le­gal­iz­ing drug im­por­ta­tion would ac­tu­ally harm them. It would force Amer­i­can phar­ma­cies to com­pete on a deeply un­even play­ing field. For­eign com­pa­nies, ben­e­fit­ing from the so­cial­ist price con­trols of their home govern­ments, could de­stroy mid­dle-class jobs across the coun­try. The pol­icy shift would hit Texas par­tic­u­larly hard. The drug in­dus­try is a cen­tral pil­lar of our econ­omy, con­tribut­ing $52 bil­lion to our an­nual eco­nomic out­put.

To­day, drug firms sup­port more than 36,000 lo­cal jobs, which are gen­er­ally high-skilled, im­mune to out­sourc­ing and pay out mid­dle-class wages that can sup­port a fam­ily.

And this work can pro­foundly im­prove hu­man life. For in­stance, Austin-based Xeris Phar­ma­ceu­ti­cals just an­nounced it raised $41 mil­lion to fund re­search into a new, cut­ting-edge treat­ment for hy­po­glycemia, a con­di­tion af­flict­ing mil­lions of di­a­bet­ics. In to­tal, Texas drug firms invest nearly $1 bil­lion ev­ery year to fi­nance some 3,000 clin­i­cal tri­als.

This in­dus­try would be put in jeop­ardy if drug im­por­ta­tion were le­gal­ized. Trump won the White House in large part be­cause he promised to pro­tect Amer­i­can work­ers from un­fair for­eign com­pe­ti­tion. Drug im­por­ta­tion is un­fair for­eign com­pe­ti­tion at its worst.

Right now, fed­eral law sig­nif­i­cantly re­stricts pur­chases of im­ported pre­scrip­tion medicines. Over­turn­ing those re­stric­tions has ob­vi­ous ap­peal: Drug prices in Canada and West­ern Europe are gen­er­ally lower than they are here in Amer­ica.

But medicines are cheaper in for­eign markets be­cause govern­ments in those coun­tries im­pose price con­trols. The Cana­dian gov­ern­ment, for in­stance, sets low price ceil­ings on drugs sold through its na­tional health pro­gram and fines com­pa­nies for break­ing them. Bri­tish au­thor­i­ties tightly limit the prof­its drug com­pa­nies can make through the Na­tional Health Ser­vice.

This so­cial­ist tin­ker­ing is strik­ingly sim­i­lar to cur­rency ma­nip­u­la­tion, the prac­tice per­fected by China, in which a coun­try’s cen­tral gov­ern­ment keeps its cur­rency ar­ti­fi­cially weak to boost ex­ports. Trump has re­peat­edly de­nounced that abuse and rightly pointed out that it un­der­mines Amer­i­can man­u­fac­tur­ing. He should take a sim­i­lar stance here. Le­gal­iz­ing im­por­ta­tion would flood the do­mes­tic mar­ket with ar­ti­fi­cially cheap drugs. Texas firms wouldn’t stand a chance; they have to charge gen­uine mar­ket rates to cover the bil­lions of dol­lars they typ­i­cally have to spend to de­velop just one new medicine. A big slice of their cus­tomer base would switch to cheap for­eign drugs; sales would plum­met. They’d be forced to cut jobs and scale back new re­search.

There are bet­ter ways to drive down do­mes­tic drug prices that don’t put our econ­omy at risk.

For starters, the White House and Congress should work to­gether to reau­tho­rize the Pre­scrip­tion Drug User Fee Act. Passed in 1992, this law cre­ates what amounts to user fees for the Food and Drug Ad­min­is­tra­tion. Drug com­pa­nies have to pay a set amount ev­ery year to en­sure the agency has the re­sources it needs to quickly and ac­cu­rately as­sess new medicines. This leg­is­la­tion has helped usher more than 1,500 drugs into the Amer­i­can mar­ket, but the cur­rent it­er­a­tion ex­pires in Septem­ber. Reau­tho­riz­ing the act would keep new medicines flow­ing and fuel com­pet­i­tive pres­sures in the drug mar­ket.

Next, as part of his ef­fort to rene­go­ti­ate Amer­ica’s trade deals, the pres­i­dent should en­sure that our trad­ing part­ners re­spect in­tel­lec­tual prop­erty law. China, In­dia and other ma­jor global economies rou­tinely vi­o­late our patent pro­tec­tions and il­le­gally pro­duce generic knock­off med­i­ca­tions. Beat­ing back this abuse would force cus­tomers in those markets to pay fair prices and al­low drug com­pa­nies to re­duce the prices they charge here at home.

Cut­ting drug prices by im­port­ing for­eign medicines may sound promis­ing. But it would ex­pose Texas em­ploy­ers to un­fair for­eign com­pe­ti­tion and wipe out lo­cal jobs. And that’s no way to keep an econ­omy like Texas’ great.


A phar­ma­cist in Win­nipeg, Man­i­toba, fills pre­scrip­tions. Canada sets low price ceil­ings on drugs sold through its na­tional health pro­gram.


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