Drugs and politics.

The NYT demonstrates clearly why all the talk about dealing with high drug prices by allowing imports from Canada has been a complete waste of time.

It may make political sense to point to Canada as a solution to high prescription drug prices in the United States. But many economists and health care experts say that importing drugs from countries that control their prices would do little to solve the problem of expensive drugs in the United States, where companies are free to set their own prices.



To begin with, there are not enough Canadians, or drugs in Canada, to make much of a dent in the United States. There are 16 million American patients on Lipitor, for instance - more than half the entire Canadian population.

Exporting and reimporting the drugs costs money; the role of Canada is simply to pick up Canadian price controls. If price controls are a good idea, impose them directly, and save the money that is wasted shuffling the drugs across the border and back. If the candidates don't have the nerve to propose direct price controls here, they ought to shut up about Canada. Kerry seems more culpable for this political sham, because he's made drug importation from Canada a campaign pledge, but Bush didn't have the nerve to point out that this is a sham. He acted as though the only thing holding him back was that we'd need some way to ensure the drugs are safe.



Canadian-style price controls aren't just politically unpopular though:

Efforts to force down American prices to Canadian or European levels could radically change the economics of the pharmaceutical industry - which effectively depends on United States profits for all of its activities, including a substantial portion of its spending on research and development. ... John Vernon, an economist at the University of Connecticut, estimated that dropping drug prices in the United States to the levels in the rest of the world would cut drug companies' investment in research and development by 25 to 30 percent.

Drug pricing is full of complexity that the candidates never talk about. Complexity? Wasn't Kerry supposed to be the candidate with a mind for complexity? Oh, but that isn't the point. I'm sure both Kerry and Bush understand the basic complexity of the drug cost problem, they've just decided to set the matter of trying to solve the problem to the side, so they can use the problem itself to toy with the emotions of people who need drugs.



UPDATE: I hope people notice that Canada is not exactly interested in accommodating our drug reimportation schemes. The Financial Times reports (seen first on Drudge):

[G]rowing concern in Canada that growing exports to the US could lead to rising prices and shortages north of the border has prompted the Canadian International Pharmacy Association (Cipa), whose members include several of the biggest internet and mail-order drugstores, to act. “We don't want to give Americans the impression that we have unlimited supply for them to tap into on a commercial basis,” said David Mackay, the association's executive director. Americans, he added, “can't get everything from Canada. We can't be your complete drugstore”.