Last week, the Food and Drug Administration announced that it is taking steps to allow the import of cheaper drugs from Canada and other countries. The goal is to enable U.S. citizens to attain the same cost savings as consumers in other countries.
Drug prices are far lower in many countries than America. Canada regulates the prices of many drugs. In Europe, governments control costs through a negotiating process.
Several polls have indicated that health care will be the top issue for Americans in the the 2020 presidential election. A Kaiser Family Foundation poll found in February that 78% of Americans supported importing drugs from Canada to lower costs.
While this step from the Trump Administration has benefits, critics raise several well-founded arguments.
First, some industry groups in Canada expressed reservations that this change in U.S. policy might put a strain on their pharmaceutical supplies. The Canadian population is approximately 10% of America’s. Thus, concerns about meeting both expanded U.S. demand and current Canadian demand are well founded. Thierry Belair, a Canadian health-ministry spokesman said Canada’s drug market is not big enough to have a major impact on U.S. prices.
Secondly, reducing prices could threaten U.S. research and development efforts that yield new lifesaving drugs. According to the Tufts Center for the Study of Drug Development, on average a new medicine takes over 10 years and costs $2.6 billion to develop. According to a Milken Institute Report of 2011, the U.S. produced 57% of the world’s new medicines between 2001 and 2010.
Instead of encouraging promotion of new medicines, many countries outside of the U.S. impose price controls on prescription drugs — including U.S. invented drugs — to make them cheaper for their citizens. If American companies refuse to sell their medicines at these steeply discounted dictated prices, foreign countries threaten to break their patents and produce knockoff versions of the medicines.
For decades, U.S. federal officials have not helped American research companies negotiate higher prices with foreign countries. As a consequence, our companies frequently give in to the latter’s price demands because they need to get additional revenue even if those sales are at a discount. In brief, foreign price controls succeed because American consumers subsidize the citizens of other countries.
While I applaud lowering costs of pharmaceutical drugs, I also would like to see our government take steps to raise drug prices overseas. For us to continue to benefit from new medicines, we need other countries share the burden now paid by the American consumer.
Let me share my personal story. In 2006 I was diagnosed with Chronic Myelogenous Leukemia (CML). Fortunately, several years before my diagnosis, a miracle drug, Imatinib, sold under the brand name Gleevec, received FDA approval. This drug changed my diagnosis from a certain death sentence. Instead, I took Gleevec for over 10 years before it eradicated CML. While I was elated to be “cured,” Gleevec cost about $70,000 annually. By contrast, unless most CML patients receive a subsidy, they cannot afford this life saving drug.
Let me state emphatically that I am grateful to the pharmaceutical company that developed Gleevec because it is an orphan drug that saved my life. That is, only 9,000 Americans this past year were diagnosed with CML. Thus, the drug manufacturer took enormous risk with little prospect of a positive return.
In brief, the importing of lower cost drugs from countries such as Canada is a step in the right direction. However, we need to calibrate carefully the repercussions of each cost cutting step because we do not want to curb the research efforts of our pharmaceutical industry.
Each of us knows families that are struggling to pay the costs of high priced medicines. We need to take measures to alleviate their economic burden.
Originally published in the Sarasota Herald-Tribune
