Early on the morning of July 25th, the United States House of Representatives passed legislation to allow the importation of prescription drugs from 26 countries with minimal oversight by the Food and Drug Administration. H.R. 2427, sponsored by Rep. Gil Gutknecht (R-Minnesota), will now be considered along with other legislation to add a prescription drug benefit to the Medicare program. As the Medicare conferees decide how to handle the importation issue, it is important to examine what consumer safety advocates and trade experts have said about the practice.

Safety

• FDA Commissioner Mark McClellan warned the legislation “creates a wide channel for large volumes of unapproved drugs and other products to enter the United States that are potentially injurious to public health and pose a threat to the security of our Nation’s drug supply.” ¹
  
  
  
• The White House said, “H.R. 2427 is dangerous legislation … The bill would open new channels for the importation of drugs into the United States without a workable system of oversight and enforcement, allowing counterfeit, adulterated, inactive, and unapproved drugs to enter the country.” ²
  
  
  
• Congressman John Dingell (D-Michigan) said, “It will allow this country to be flooded with unsafe, counterfeit drugs; drugs that will not do what they should; drugs that are unsafe; drugs that will kill the American people.” ³
  
  
  
• Health Canada said this in a letter to The Washington Post: “The Government of Canada has never stated that it would be responsible for the safety and quality of prescription drugs exported from Canada into the United States, or any other country for that matter. Health Canada is first and foremost concerned with the health and safety of Canadians.” ⁴
  

Free Trade

• Stuart Eizenstat, former Ambassador to the European Union and a renowned trade expert, said, “Unfair trade is not free trade … All U.S. trade agreements, without exception, permit restrictions on foreign imports that are traded unfairly. To allow the importation of price-controlled pharmaceuticals is, in effect, to allow the ‘dumping’ of such goods into the U.S. market, against which U.S. trade laws expressly guard. Far from promoting free trade, H.R. 2427 distorts trade by sanctioning unfair competition between price-controlled pharmaceuticals from abroad and those based upon market-related prices in the United States.” ⁵
  
  
  
• “As U.S. Trade Representative I spent a lot of time and effort challenging policies that discriminate against our exporters. Foreign price controls, on pharmaceutical products and many others, fit that category,” said Clayton Yeutter, who was the U.S. Trade Representative from 1985 to 1988 and has served in cabinet posts in four administrations. “The Trade Promotion Authority (TPA) law recognizes foreign price controls as discriminatory non-tariff barriers and it directs U.S. negotiators to work to eliminate these ill-conceived measures. Clearly, passage of H.R. 2427 would significantly compromise the Administration’s ability to carry out that congressional mandate.” ⁶
  
  
  
• Many argued importation would encourage free trade because it would force foreign governments to begin to lift their price controls. But Rep. Chris Cannon (R-Utah) said, “This notion does not square with the facts … There are real constraints on the ability of a patent-dependent industry to simply exit a market and refuse to abide by foreign price controls. The patent laws of almost every single country in the world allow the government to confiscate or ‘compulsory license’ a company’s patent if it is not ‘worked’ locally. So if a company decided that the foreign price control was too onerous and refused to supply the product, the response in most foreign countries would not be to raise the price or do without, but rather to allow a competitor to copy the patented product instead,” said Cannon. ⁷
  

¹Letter to House Energy and Commerce Committee Chairman Billy Tauzin. 18 July 2003.
²Statement of Administration Policy. 23 July 2003.
³Congressional Record. 24 July 2003.
⁴Letter to the Editor of The Washington Post. Diane Gorman, Assistant Deputy Minister. 9 May 2003.
⁵Letter to House Speaker J. Dennis Hastert. 11 July 2003.
⁶Letter to House Speaker J. Dennis Hastert. 18 July 2003.
⁷Dear Colleague Letter. 22 July 2003.

Early on the morning of July 25th, the United States House of Representatives passed legislation to allow the importation of prescription drugs from 26 countries with minimal oversight by the Food and Drug Administration. H.R. 2427, sponsored by Rep. Gil Gutknecht (R-Minnesota), will now be considered along with other legislation to add a prescription drug benefit to the Medicare program. As the Medicare conferees decide how to handle the importation issue, it is important to examine what consumer safety advocates and trade experts have said about the practice.

Safety

• FDA Commissioner Mark McClellan warned the legislation “creates a wide channel for large volumes of unapproved drugs and other products to enter the United States that are potentially injurious to public health and pose a threat to the security of our Nation’s drug supply.” ¹
  
  
  
• The White House said, “H.R. 2427 is dangerous legislation … The bill would open new channels for the importation of drugs into the United States without a workable system of oversight and enforcement, allowing counterfeit, adulterated, inactive, and unapproved drugs to enter the country.” ²
  
  
  
• Congressman John Dingell (D-Michigan) said, “It will allow this country to be flooded with unsafe, counterfeit drugs; drugs that will not do what they should; drugs that are unsafe; drugs that will kill the American people.” ³
  
  
  
• Health Canada said this in a letter to The Washington Post: “The Government of Canada has never stated that it would be responsible for the safety and quality of prescription drugs exported from Canada into the United States, or any other country for that matter. Health Canada is first and foremost concerned with the health and safety of Canadians.” ⁴
  

Free Trade

• Stuart Eizenstat, former Ambassador to the European Union and a renowned trade expert, said, “Unfair trade is not free trade … All U.S. trade agreements, without exception, permit restrictions on foreign imports that are traded unfairly. To allow the importation of price-controlled pharmaceuticals is, in effect, to allow the ‘dumping’ of such goods into the U.S. market, against which U.S. trade laws expressly guard. Far from promoting free trade, H.R. 2427 distorts trade by sanctioning unfair competition between price-controlled pharmaceuticals from abroad and those based upon market-related prices in the United States.” ⁵
  
  
  
• “As U.S. Trade Representative I spent a lot of time and effort challenging policies that discriminate against our exporters. Foreign price controls, on pharmaceutical products and many others, fit that category,” said Clayton Yeutter, who was the U.S. Trade Representative from 1985 to 1988 and has served in cabinet posts in four administrations. “The Trade Promotion Authority (TPA) law recognizes foreign price controls as discriminatory non-tariff barriers and it directs U.S. negotiators to work to eliminate these ill-conceived measures. Clearly, passage of H.R. 2427 would significantly compromise the Administration’s ability to carry out that congressional mandate.” ⁶
  
  
  
• Many argued importation would encourage free trade because it would force foreign governments to begin to lift their price controls. But Rep. Chris Cannon (R-Utah) said, “This notion does not square with the facts … There are real constraints on the ability of a patent-dependent industry to simply exit a market and refuse to abide by foreign price controls. The patent laws of almost every single country in the world allow the government to confiscate or ‘compulsory license’ a company’s patent if it is not ‘worked’ locally. So if a company decided that the foreign price control was too onerous and refused to supply the product, the response in most foreign countries would not be to raise the price or do without, but rather to allow a competitor to copy the patented product instead,” said Cannon. ⁷
  

¹Letter to House Energy and Commerce Committee Chairman Billy Tauzin. 18 July 2003.
²Statement of Administration Policy. 23 July 2003.
³Congressional Record. 24 July 2003.
⁴Letter to the Editor of The Washington Post. Diane Gorman, Assistant Deputy Minister. 9 May 2003.
⁵Letter to House Speaker J. Dennis Hastert. 11 July 2003.
⁶Letter to House Speaker J. Dennis Hastert. 18 July 2003.
⁷Dear Colleague Letter. 22 July 2003.