Monday, May 07, 2007

Killing the Golden Goose That Gives Us New Drugs

From a scene on the TV show West Wing about protecting pharmaceutical patents. One guy says: "Those pills cost them only 4 cents to produce." The other guy says: "That's not true. The second pill costs them 4 cents, the first pill costs them $800 million dollars."'

From an excellent editorial in today's WSJ by Cato's Roger Pilon about the Senate passing a drug reimportation bill:

Given FDA safety and efficacy standards, it takes on average 12 to 15 years and over $800 million for a company (and most are American) to develop a new drug. But only the U.S. market is free. Abroad, pharmaceutical companies must negotiate prices with socialized medical systems. As a result, foreigners usually pay far less than Americans for their patented drugs. Americans bear the lion's share of R&D costs, subsidizing socialized medical systems in the process, while foreigners are classic "free riders."

There's no question that Congress is responding here to popular will. But the long-term implications are palpable. If companies are forced by the U.S. government to continue supplying cheap drugs to countries from which they are then reimported to the U.S. -- crowding out the higher-priced domestic supply of drugs -- it's only a matter of time until profits are insufficient to support the enormous costs of R&D for future drugs. No one wants to kill that golden goose, but there it is.


At 5/08/2007 2:18 AM, Anonymous Anonymous said...

Fascinating. In 2005, Switzerland, Germany, Belgium, France, & the Netherlands together exported $US 31.4 thousand million worth of medicines & pharmaceuticals. That is (jointly) some 2.75 times as much as the US ($US 11.4 thousand million.) Were these goods first imported from the US & then re-exported? Do the pharmaceutical companies in these countries only produce licensed American products?

At 5/08/2007 1:21 PM, Anonymous Anonymous said...

An interesting parallel is garbage. Because of the Interstate Commerce Clause of the Constitution the Supreme Court has ruled that U.S. states can't restrict the import of Canadian garbage. Since some of the import of garbage is products we exported to Canada, then, some of the imported garbage initially came from the U.S. If so, then, why can’t the states import prescription drugs from Canada that we exported to Canada? Any ideas?

At 5/10/2007 12:14 PM, Anonymous Anonymous said...

Speaking of garbage, I've wondered for some time now how many "good paying" jobs will be lost if Michigan politicians are successful in their quest to restrict the business of landfill operators.

Apparently, good paying jobs aren't as important as some politicians would have us believe.


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