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158 IRET Congressional Advisory 1 (2003)

handle is hein.taxfoundation/iretcgadv0155 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies thait will promote growth and efficient operation of the market economy. July 22, 2003 Advisory No. 158 SNATCHING DISEASE FROM THE JAWS OF VICTORY? REIMPORTATION OF DRUGS IS A DANGER TO RESEARCH AND FUTURE GENERATIONS The House of Representatives is about to vote on a proposal, introduced by Representative Gil Gutknecht (R-MN), to allow U.S. residents to freely order U.S.-made prescription drugs from Canada and Europe, where they are often available at less than half the price charged in the United States. This reimportation of U.S. drugs would certainly save current drug users money, but at a high cost. Reduced revenue from drug sales will Reduced vei erode the ability and the will erode th incentive for drug companies inentive for to undertake the very risky and expensive process of undertake th developing new medicines. The reimportation bill will new medieine deny new and improved treatments to tens of millions of future patients, resulting in earlier death and reduced quality of life compared to what these people could have under current law. Heavy-handed lobbying techniques and the unsympathetic view that many Americans have of drug companies may lead some Members of the House to cast their vote for the bill. This would be a shame, because on the merits, the bill is horrible economic, social, and health care policy. In recent years and months, new developments in biology and chemistry have opened up amazing opportunities for progress against heart disease, cancer, and viral diseases of all sorts, including AIDS. The human genome has been deciphered. Genes responsible for a wide range of diseases are being pinpointed and analyzed to determine what countermeasures might be possible. Scientists are learning how to tailor a drug to the specific genetic makeup of a cancer patient's tumor. Our understanding of the chemistry of cells and viruses is growing apace. would be urging the mefrom drug sales e ability and the dr-ug companies to e very cess of risky and develop~ing One would think that society research community to take the fullest advantage of these scientific advances by translating them as fast as possible into practical pills and treatments. Instead, the public and the politicians are focused on the cost and affordability of existing medicines and treatments. Their knee jerk reaction is to impose price controls, or let people import drugs from abroad where other governments have set low prices, or to demand discounts for patients in their states or in specific federal programs. The direct result of ratcheting down the returns on drug development will be to slow the rate of scientific advance and delay the introduction of new medications and treatments made possible by the new science. This is a real and inescapable result, and it is true even if the drug companies are among those who say so. The ability of poor Americans to afford medication is a legitimate concern. But drug affordability is a welfare issue, arising because some people have low incomes. It is not a problem with the price of the drugs. The right reaction is to leave g~8m A * * ge~ a ~ig

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