(12/03) The issue of re-importation of prescription drugs is a complicated problem. States and municipalities including Burlington have joined a nationwide movement, in trying to control escalating health costs, to look to Canada for cheaper drugs. Governor Douglas is proceeding cautiously but deliberately looking at the idea. I had reservations on this approach but have changed my mind.

Prescription drugs just don’t suddenly appear and they don’t come from Canada. They come from companies who are in business to make a profit and whose success has an impact on our quality of life.

I also recognize that prescription drugs are making life better today for everyone of us. Drugs help regulate blood sugar, blood pressure, cholesterol, and allergies. One company is even testing a vaccine for Alzheimer’s. I applaud their progress. However, I question the pharmaceutical industry’s price differentiation and unique regulatory policies no other U.S. industry receives.

I attended a National Legislative Association on Prescription Drug (NLA) meeting in DC recently and heard Congressman Gil Gutknecht (R-Minn) argue that blocking re-importation is not consistent with the free market our economy is based on.

Gutknecht represents a farming community in Minnesota whose principal income source is hog’s. When Canada exports drove the price of hogs down, the Congressman complained to the Secretary of Agriculture who told him Canada’s action was consistent with the free trade provisions of NAFTA. Gutknecht reasoned if hogs could be protected by NAFTA why can’t prescription drugs. He then launched a campaign in Congress to legalize the re-importation of cheaper pharmaceutical from Canada.

Rep. Gutknecht further argued that Intel spends billions developing semi-conductor chips. IBM also invests billions on technology and product development. These companies compete in a global market where U.S. trade policies don’t protect their profit like they do for pharmaceuticals.

To promote free trade you can’t make excuses for protectionism and that’s what all the free market thinkers are doing arguing against re-importation of prescription drugs. The U.S. prohibition on drug importation is rewarding socialist systems like Canada that imposes price controls on drug companies that choose to do business here. As a result, we pay unnaturally high prices so the rest of the world can pay unnaturally low prices.

Bernie Sanders, MC also spoke at the meeting. Though Bernie took credit for catapulting re-importation of Canadian drugs to national prominence through his publicized bus buying trips to Canada, he called pharmaceuticals companies unscrupulous, liars, deceivers, immoral and full of dirty tricks. Sanders wants the government to pay for research and development and dictate drug research priorities. Rep. Sanders presentation was some contrast to Rep. Gutknecht’s.

Another presenter at NLA was Secretary General Donald Macarthur of the European Association of Pharmaceuticals. He advocated parallel trading, a unique idea used by 15 European countries to reduce prescription drug costs.

Mr. Macarthur explained that parallel traders buy surplus medicines from established wholesalers in member countries where products are cheaper. These drugs are resold at a profit to wholesalers in other member countries or direct to pharmacies. Parallel traders neither manufacture medicines nor interfere with the actual product, but merely adapt labeling to meet local requirements according to national law.

Though parallel trading accounts for about 4% of total prescriptions of the member countries, it saved around $750 million in 2002. Also, the quality of goods bought is unchanged because the goods traded are those of original manufacturers, sourced exclusively in Europe.

Arguments opposing re-importation to the U.S. are that drug quality can’t be guaranteed, research and development would be curtailed and counterfeit drugs would be introduced. Macarthur said that data from Europe shows pharmaceutical research has not been affected and because of strict quality controls, drug counterfeit and pirating is non-existent. Parallel trading increases the effectiveness of the free market, and is a driving force to create a single market in Europe.

In Congress, Sen. Lieberman (D-Conn) offered another alternative to the Canadian drug-pricing dilemma. He suggested that we “ask Canadian who have price controls and the Europeans who have price controls, to begin paying part of the R&D costs.” If they did, the R&D expenditure would be shared and our drug prices would be reduced.

The old adage that “politics makes strange bedfellows” is fitting when it comes to the re-importation of pharmaceuticals from Canada. Gutknecht, Sanders, Macarthur and Liberman are all of different political persuasions but are in alliance to reduce the cost of prescription drugs for consumers.

We must strive for more affordable drug costs and the drug companies must learn to survive like Intel and IBM by pricing and competing in the global open market. As Senator Sununu (R-NH) said, “the long run solution is to allow choices and options and competition.”

What lies in our power to do lies in our power not to do.  The uproar over the pharmaceutical prescription drug pricing strategy is real and it won’t be shut down.

This year is rapidly coming to a close.  My wife and I wish you a HAPPY HOLIDAY and hope you share the joy of this special season with many family and friends.

Thank you for your calls and notes. I can be reached at 658-3975 (home), 1-800-322-5616 or 228-2228 (State House) and via e-mail.

Rep. Frank Mazur
South Burlington