Re-importing Rx Drugs from Canada Could Open the Door to Dangerous Counterfeits

 

Will Rogers, the nation’s favorite humorist during the Great Depression, once observed: “This country has come to feel the same when Congress is in session as it does when a baby gets hold of a hammer.”

Congress how has an opportunity to prove Rogers’ observation wrong — or confirm his judgment.

The benchmark vote will occur on a cockamamie bit of legislation that would allow wholesalers and pharmacies to import prescription drugs from Canada at its price-controlled rates — a bill that many experts believe constitutes a grave threat to both America’s health and security.

The bill already has passed the Senate, and the House is poised to take action.

In the days following the Labor Day weekend, a small platoon of lobbyists for chain drug stores and other large retailers fanned out across Capitol Hill button-holing lawmakers and urging them to vote “right” on re-importation.

They couched their sales pitch in altruism, suggesting the American seniors can save huge amounts by importing U.S.-made drugs from Canada. But that claim ignores the realities of economics.

Whatever discounts the Canadian government negotiates with U.S. drug makers will quickly evaporate if Canada begins selling those drugs back to American consumers. U.S. pharmaceutical firms will try to renegotiate higher prices with the Canadian government or limit shipments to Canada’s bare-bone needs – or both.

The true beneficiaries — although only on a temporary basis — will not be consumers, but large drug retailers. While re-importing drugs eventually will cause their prices to rise, organizations that can buy in bulk initially stand to save millions of dollars in lower wholesale costs.

However, recent surveys have shown that lower wholesale prices for pharmacies don’t always translate into lower retail prices for consumers.

A recent survey found that big retail-drug chains like Walgreens, Rite-Aid and CVS mark up generics by as much as 4,000 percent. WXYZ-TV, an award-winning ABC-affiliate station in Detroit, confirmed those are real-world figures in an extensive investigation this summer.

At several stores, for instance, the station found seniors were being charged $72.99 for 30 tablets of 20 milligram HCL, a generic substitute for Prozac that has a wholesale price of $2.16.

An even more worrisome problem is ensuring the safety of drugs coming into the United States from Canada.

Former FBI official Anthony E. Daniels recently warned that re-importation would open the floodgates to “adulterated and often dangerous counterfeit drugs from unscrupulous profiteers, deranged individuals and even terrorists.”

Daniels noted that counterfeits manufactured as laboratories in China and other Asian nations appear to be identical to popular American drugs — right down to the bar codes and inventory numbers on the packaging.

A recent front-page story in The Washington Post reported that an estimated 192,000 people died last year in China because of fake drugs. Some died from toxins and others died of infections because they took counterfeits drugs that were merely placebos rather than antibiotics.

The Post story said Chinese counterfeits increasingly are finding their way into the United States after being shipped into Mexico and Canada, and some are being distributed via Internet vendors in Nevada and Colorado.

“Re-importation would create a regulatory meltdown that would compromise the safety of drugs for everyone in North America,” observes Robert M. Goldberg, one of the nation’s foremost healthcare experts and the director of the Manhattan Institute’s Center for Medical Progress.

Goldberg points out that U.S. Customs Service officials already have warned that the vast majority of pharmaceuticals that enter the U.S. via the mail do so in a manner that violates present FDA requirements. Canada, he says, would become “not only a gateway for counterfeit drugs but for terrorists seeking to infect America’s medicine supply as well.”

The New York Times recently reported that an alliance of diverse organized crime groups stretching from Mexico to Iraq to Jordan has found Canada “an easy entry point into a growing American market for synthetic drugs.” Re-importation sends an open invitation to terrorists to attempt to send toxic drugs into America via Canada.

At first blush, the idea of re-importing lower-priced drugs from Canada seemed like a good idea. Like a hot-selling dot.com stock whose price reached stratospheric heights before plunging to earth, re-importation now seems prohibitively costly and unnecessarily risky.

Congress should get down to the hard work of providing a reasonable prescription drug benefit to uninsured seniors through a reformed Medicare program, rather than chasing an illusory pipedream.




Grace-Marie Turner is president of the Galen Institute, a research organization that focuses on free-market health policy ideas. She can be reached at P.O. Box 19080, Alexandria, VA 22320 or at gracemarie@galen.org.

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Will Rogers, the nation’s favorite humorist during the Great Depression, once observed: “This country has come to feel the same when Congress is in session as it does when a baby gets hold of a hammer.”

Congress how has an opportunity to prove Rogers’ observation wrong — or confirm his judgment.

The benchmark vote will occur on a cockamamie bit of legislation that would allow wholesalers and pharmacies to import prescription drugs from Canada at its price-controlled rates — a bill that many experts believe constitutes a grave threat to both America’s health and security.

The bill already has passed the Senate, and the House is poised to take action.

In the days following the Labor Day weekend, a small platoon of lobbyists for chain drug stores and other large retailers fanned out across Capitol Hill button-holing lawmakers and urging them to vote “right” on re-importation.

They couched their sales pitch in altruism, suggesting the American seniors can save huge amounts by importing U.S.-made drugs from Canada. But that claim ignores the realities of economics.

Whatever discounts the Canadian government negotiates with U.S. drug makers will quickly evaporate if Canada begins selling those drugs back to American consumers. U.S. pharmaceutical firms will try to renegotiate higher prices with the Canadian government or limit shipments to Canada’s bare-bone needs – or both.

The true beneficiaries — although only on a temporary basis — will not be consumers, but large drug retailers. While re-importing drugs eventually will cause their prices to rise, organizations that can buy in bulk initially stand to save millions of dollars in lower wholesale costs.

However, recent surveys have shown that lower wholesale prices for pharmacies don’t always translate into lower retail prices for consumers.

A recent survey found that big retail-drug chains like Walgreens, Rite-Aid and CVS mark up generics by as much as 4,000 percent. WXYZ-TV, an award-winning ABC-affiliate station in Detroit, confirmed those are real-world figures in an extensive investigation this summer.

At several stores, for instance, the station found seniors were being charged $72.99 for 30 tablets of 20 milligram HCL, a generic substitute for Prozac that has a wholesale price of $2.16.

An even more worrisome problem is ensuring the safety of drugs coming into the United States from Canada.

Former FBI official Anthony E. Daniels recently warned that re-importation would open the floodgates to “adulterated and often dangerous counterfeit drugs from unscrupulous profiteers, deranged individuals and even terrorists.”

Daniels noted that counterfeits manufactured as laboratories in China and other Asian nations appear to be identical to popular American drugs — right down to the bar codes and inventory numbers on the packaging.

A recent front-page story in The Washington Post reported that an estimated 192,000 people died last year in China because of fake drugs. Some died from toxins and others died of infections because they took counterfeits drugs that were merely placebos rather than antibiotics.

The Post story said Chinese counterfeits increasingly are finding their way into the United States after being shipped into Mexico and Canada, and some are being distributed via Internet vendors in Nevada and Colorado.

“Re-importation would create a regulatory meltdown that would compromise the safety of drugs for everyone in North America,” observes Robert M. Goldberg, one of the nation’s foremost healthcare experts and the director of the Manhattan Institute’s Center for Medical Progress.

Goldberg points out that U.S. Customs Service officials already have warned that the vast majority of pharmaceuticals that enter the U.S. via the mail do so in a manner that violates present FDA requirements. Canada, he says, would become “not only a gateway for counterfeit drugs but for terrorists seeking to infect America’s medicine supply as well.”

The New York Times recently reported that an alliance of diverse organized crime groups stretching from Mexico to Iraq to Jordan has found Canada “an easy entry point into a growing American market for synthetic drugs.” Re-importation sends an open invitation to terrorists to attempt to send toxic drugs into America via Canada.

At first blush, the idea of re-importing lower-priced drugs from Canada seemed like a good idea. Like a hot-selling dot.com stock whose price reached stratospheric heights before plunging to earth, re-importation now seems prohibitively costly and unnecessarily risky.

Congress should get down to the hard work of providing a reasonable prescription drug benefit to uninsured seniors through a reformed Medicare program, rather than chasing an illusory pipedream.




Grace-Marie Turner is president of the Galen Institute, a research organization that focuses on free-market health policy ideas. She can be reached at P.O. Box 19080, Alexandria, VA 22320 or at gracemarie@galen.org.

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