Conservative group says Internet drug reimportation = higher $$$

[Declan McCullagh <declan () well com>]

[I don't quite follow this argument. It seems to me that drug 
reimportation, via the Internet or other means, simply takes advantage 
of a kind of jurisdictional arbitrage. Perhaps prices are unsustainably 
low in Canada because of government fiat or whatnot, and mass 
reimportation will eventually make drug companies (on the margin) seek 
to avoid selling in the Canadian market unless they can raise prices to 
something closer to the U.S. market. That's probably going to happen -- 
and that situtation would preserve pharmaceutical profits -- unless more 
barriers to reimportation are erected. --Declan]



-------- Original Message --------
Subject: Press Release: New IPI Study Says Drug Reimportation May Result 
in Higher, Not Lower Consumer Costs
Date: Tue, 14 Sep 2004 11:46:55 -0400
From: Sonia Hoffman <shoffman () IPI org>
To: declan () well com





Institute for Policy Innovation (IPI) Press Release

For Immediate Release: Tuesday, September 14, 2004
Contact: Sonia Hoffman, (703) 912-5742 or shoffman () ipi org
********************************************************************

New IPI Study Says Drug Reimportation May Result in Higher, Not Lower
Consumer Costs

European Comparison: Importation Decreases R&D

(Washington, DC):  The long-run costs of importation are easily ignored by
politicians like Illinois Governor Rod Blagojevic who is granting access to
cheaper drugs by expanding Internet purchasing of pharmaceuticals from
countries like Canada and Ireland.  But this search for a quick bargain
could prove expensive, as the Governor isn’t likely to be in office when
future data proves importation harmful.

According to a new study by the Institute for Policy Innovation (IPI),
reimporting drugs is not a guarantee for cheaper prices, and in the
long-run, may result in more expensive drugs and medicine shortages.

Prescription drug importation “amount[s] not so much to consumer or
government savings as to increased profits for pharmacists and producers,”
says Jacob Arfwedson, author of “Parallel Trade in Pharmaceuticals.”

Further evidence against importation is found in Arfwedson’s comparison of
the US and Europe.

Share of R&D:
As the U.S. has stayed off importation, it has gained the lion’s share of
pharmaceutical research and development (R&D).

This is quite a contrast to the 1960s when European countries did most of
the R&D.   European R&D has decreased from 73 percent to 59 percent
(1990-1999, percentage of European companies’ global R&D expenditure).

Share of World Pharmaceutical Market:
The U.S. has also increased its share of the world pharmaceutical market
from 31 to 43 percent over the past decade. In contrast, as Europe has
allowed more importation, its share in the world pharmaceutical market has
declined from 32 to 22 percent.

********************************************************************

For copies of “Parallel Trade in Pharmaceuticals,” visit www.ipi.org or
contact Sonia Hoffman at shoffman () ipi org or (703) 912-5742.  Press
interviews welcomed.

# # #


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