This editorial by Elizabeth Wright was published on the Citizens Against Government Waste website on December 2, 2020. Wright is the organization's Director of Health and Science Policy.

Canada Says Drug Imports Are Not Happening

For several years, Citizens Against Government Waste (CAGW) has warned state governors and their legislatures that trying to set up a system to import supposedly less expensive drugs from Canada was a fool’s errand and a waste of valuable federal and state tax dollars. In a September 2020 WasteWatcher blog, CAGW discussed how Department of Health and Human Services secretaries had objected to and discouraged importation for years because it would compromise safety. We argued it would fail to save much money due to the complexity involved and that the entire idea was useless because Canada had made it clear the country would refuse to export its drugs to the U.S. The blog post built on and cited the March 5, 2020 comments CAGW made to the Food and Drug Administration’s (FDA) proposed drug importation rule.

Florida has moved the farthest in developing a drug importation program, despite CAGW’s objections in April 24, 2019, letter to Governor Ron DeSantis (R), asking him to reject legislation that would establish the program because it would be expensive and fruitless. After the governor signed the bill into law, there was a proposal for companies to bid on a $30 million contract by the end of September 2020. The October 23 Miami Herald reported that not one company stepped forward to do so, clearly understanding the risk and cost involved in setting up such an unprecedented process.

On November 28, the Globe and Mail reported that Canada Health Minister Patty Hajdu blocked bulk exports of prescription drugs to the United States and stated that, “Certain drugs intended for the Canadian market are prohibited from being distributed for consumption outside of Canada if that sale would cause or worsen a drug shortage.” On December 1, the Globe and Mail wrote that, “health policy experts say the import proposal, which went into effect Monday [November 30], is now likely doomed” and that “Dr. Allen Zagoren, a health policy professor at Drake University in Iowa, said ‘Canada’s move gives president-elect Joe Biden the political cover to seek a more practical solution.’”

The more practical solution, for which CAGW has advocated, is for foreign countries to respect U.S. biopharmaceutical intellectual property by crafting better trade deals. Canada’s drug prices are low, as they are in other countries, because their government-run healthcare systems utilize price controls that have severely harmed their biopharmaceutical research and development.

As a result, these countries ride on U.S. research, which President Trump’s Council of Economic Advisors recognized in a February 2018 report: “Worldwide profits drive innovation incentives, but when worldwide profits are partially determined by centralized pricing of governments, this induces unique free-riding issues. While drug prices in the United States are less publicly financed than in other countries, government procedures and price controls set prices in most foreign countries.” The advisers called for “enhanced trade policy” and determined that the root of the problem was, “foreign, developed nations, that can afford to pay for novel drugs, free-ride by setting drug prices at unfairly low levels, leaving American patients to pay for the innovation that foreign patients enjoy.”

It is indeed unfortunate that the Trump administration and states spent time, energy, and the taxpayers’ money trying to implement a policy that simply imported another country’s socialistic pharmaceutical price controls instead of vigorously encouraging members of Congress to pass trade deals that would make developed countries pay their fair share of U.S-funded biopharmaceutical research and in the process give value to their nation’s research and development to increase innovation worldwide.

While Canada’s clear “no” appears to be stopping drug importation for now, there are other proposals being considered that would also be damaging to U.S. global leadership in biopharmaceuticals. Indeed, President-elect Biden will likely keep moving forward on implementing the Trump administration’s most favored nation policy for Medicare Part B drugs that essentially sanctions socialistic, government-run healthcare systems. None of these ideas make sense after the biopharmaceutical industry created a safe and effective COVID-19 vaccine in record time.