Politics & Policy

No Panacea

Canadian drugs won't solve high-drug-price problems.

Now that the Easter Bunny has completed his Sunday rounds, perhaps he will fulfill the fantasies of American politicians and make Canadian drug importation work. Alas, Canada is no Oz with streets paved with Prozac. Unless its 32.1 million citizens start multiplying like rabbits, Canada’s pharmaceutical market will remain too small to satisfy 295.7 million Americans.

Using recently released data from IMS Health, Canada, a leading medical consultancy, I compared the top 20 pharmaceuticals dispensed in America with Canadian retail distribution of those drugs. My findings are here.

Among these 20 drugs, U.S. pharmacists filled 628.7 million prescriptions in 2004, versus 54 million in Canada, or 8.6 percent of American demand.

Lipitor, Pfizer’s anti-cholesterol agent, was No. 1 in both countries. Imagine that America dispatched the 82nd Airborne Division to seize Canada’s Lipitor, leaving our neighbors to fight cholesterol with Chinese herbs and Canadian bacon (a splendid Easter-egg accompaniment). Canada’s 9.75 million Lipitor prescriptions would cover 13 percent of the 74.8 million orders filled here last year. If America captured just one-tenth of Canada’s Lipitor, leaving Ottawa a serious but likely manageable shortage, U.S. supplies would grow by just 1.3 percent.

Take Synthroid, Abbot’s hypothyroidism cure. Importing one-tenth of Canada’s supply of America’s No. 3 drug would boost domestic availability by only 1.8 percent. Other drugs are less promising. One-tenth of Canada’s Zocor–Merck’s anti-cholesterol compound, No. 7 in America and No. 121 in Canada–would increase U.S. supplies by 0.23 percent. A tenth of Canada’s Toprol-XL, AstraZeneca’s anti-hypertensive drug (America’s No. 5, Canada’s No. 193), would boost U.S. quantity by 0.12 percent. For Pfizer’s anti-depressant, Zoloft (America’s No. 6, Canada’s No. 473), the equivalent figure is 0.05 percent.

Such microscopic supply increases barely will make prices flutter.

Worse, some drugs–such as Ambien, Sanofi-Synthelabo’s sleep aid–are unavailable in Canada.

“Milk is under price control in Canada–and significantly cheaper than south of the 49th parallel,” notes Toronto physician David Gratzer, M.D., a Manhattan Institute senior fellow. “Would Canada be able to supply all 50 states with milk?”

Naturally, Canadian officials will not tolerate seeing even 10 percent of their drug stocks devoured by U.S. patients.

“To me, it is a matter of common sense that Canada cannot be the drugstore for the United States,” Canadian Health Minister Ujjal Dosanjh declared in a November 20, 2004, speech at Harvard Medical School. “Neither American consumers nor Canadian suppliers should have any illusions otherwise.”

As Canada’s medication supplies grow tighter, some of its Internet pharmacies may ship dodgy drugs. The governments of Illinois, Kansas, Missouri, Vermont, and Wisconsin manage the I-Save-Rx Canadian drug-importation initiative. According to Bloomberg News, Ontario-based CanaRx Services Inc., an I-Save-Rx supplier, is considering selling Indian inventory. Temple University researchers estimate that some 35 percent of the world’s counterfeit drugs are from India, making it Earth’s leader in phony pharmaceuticals.

“This admission of possible use of Indian drugs goes to show you what we’ve feared all along,” warned Missouri Pharmacy Association CEO Ron Fitzwater. “Internet suppliers are looking to foreign countries, some that are noted counterfeiters, for profit and are putting the health and safety of consumers second.”

“The debate over drug importation is not about Canada being able to supply the U.S. market, because it does not have the supply to do so,” says Vancouver native Sally Pipes, president of the San Francisco-based, free-market Pacific Research Institute and author of Miracle Cure: How to Solve America’s Health-Care Crisis and Why Canada Isn’t the Answer.

“It is really about American politicians wanting cheaper prescription drugs for their constituents. The only way that we can have cheaper drugs in America is through the government mandating price controls which will destroy the research and development that are so vital to the introduction of new life-enhancing drugs for everyone.”

Rather than import Canada’s socialistically fixed pharmaceutical prices, U.S. lawmakers should ignore drug costs and work to boost Americans’ incomes so we can afford innovative, life-saving, and sometimes costly prescriptions. Tax cuts, universal health-savings accounts, personal retirement accounts within Social Security, and even tort reform advance this objective. U.S. politicians should stop playing with rabbits and instead pull dynamic economic growth out of a hat.

Deroy Murdock is a columnist with Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Arlington, Virginia. He currently advises the Manhattan Institute.

Deroy Murdock is a Manhattan-based Fox News contributor, a contributor to National Review Online, and a senior fellow with the London Center for Policy Research.

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