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Thursday, October 20, 2011

Prescription Drug Reimportation Means Importing Price Controls, and Harming Consumers and Economy

An amendment offered by Senator Vitter (Amdt. #769) to the Agriculture appropriations bill may be well meaning, but it poses serious health and safety risks to American consumers. It also threatens innovation and investment in the dynamic and entrepreneurial U.S. pharmaceutical sector where many small firms operate.

Part of the medical community's oath is to first do no harm. That should apply to Congress as well when it comes to advancing policies affecting the health and safety of U.S. consumers. As SBE Council has expressed to the Senate in the past, prescription drug reimportation would do considerable harm to our economy and consumers.

As various reports and media investigations, as well as former FDA commissioners and Health and Human Service secretaries have pointed out, importation raises risks regarding counterfeit or mislabeled medicines. We know from a 2007 New York Times investigation, for example, that many unsuspecting consumers throughout the world who believed they were buying drugs from pharmacies and outlets from Canada were actually buying counterfeit drugs from other countries. A December 2005 investigation by the FDA found that 85 percent of "Canadian" drugs actually came from other countries. These drugs may be potentially unsafe. In addition, rogue websites do not require valid prescriptions, and a significant portion sell foreign or non-FDA approved medicines.

But there are additional threats. Reimportation effectively means importing price controls from other nations. That spells troubles for many U.S. businesses and for health care consumers in general. Pharmacies, including small mom-and-pop shops, would face losing customers or even being forced out of business due to foreign governments' setting prices, and Congress allowing those misguided policies to be imported into the U.S.

Of course, the greatest damage would be done to pharmaceutical firms. One of the key reasons why the U.S. has the most innovative pharmaceutical industry in the world is due to a lack of price controls. Limiting prices means limiting potential returns. That, of course, discourages investment, research and innovation.

It is critical to keep two points in mind.

First, the pharmaceutical business involves substantial risk taking. It costs as much as a $1 billion and 10-15 years to bring a drug to market, and for every 5 to 10 thousand compounds tested, only one medicine makes it to the marketplace.

Second, most pharmaceutical firms are small to medium-size companies - with 90% of manufacturers having fewer than 500 employees, and 56% fewer than 20 employees. That's small business.

Pharmaceutical firms are working on the medicines that will improve and save lives. Imposing - or importing - price controls places this incredibly important work in peril.

Quite simply, prescription drug reimportation is a policy that would cost the U.S. in terms of lost innovation, lost businesses, lost jobs, and ultimately, lost lives.

Karen Kerrigan
President & CEO
Small Business & Entrepreneurship Council

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