The White House Is Right To Threaten a Veto on Drug Importation

September 21, 2005 3 min read

Andrew Grossman

Former Visiting Fellow

Andrew served as a Visiting Fellow.

Another year, another bill, and another amendment to legalize prescription drug importation. Importation's proponents are attempting once again to sneak it into law by amending annual, must-pass legislation. Their target this time is the Agriculture appropriations bill, but almost any bill could be game. Whatever means they use to try to pass importation, the objections to it will still be the same: importation would not lower prices significantly, would threaten the development of new drugs, and would pose serious safety risks. The White House is right to threaten a veto.

Back in December 2004, the Office of Management and Budget issued a Statement of Administration Policy promising a veto for any Senate legislation that would allow re- importation of prescription drugs without addressing the safety concerns that such importation raises. As adequately addressing the safety issue would undermine the one advantage of importation-that is, lower prices due to foreign governments' prices-control regimes-and probably would be impossible anyway, this amounted to a blanket veto threat on the prospect of drug importation.

On Monday of this week, the White House renewed its threat, focusing specifically on the 2006 Agriculture appropriations bill, to which Sen. David Vitter (R-LA) and Tom Coburn (R-OK) are expected to propose an amendment that would force the FDA to allow and regulate importation.

The amendment "is expected to be stripped out during conference discussions," according to The Hill. It's really just as well.

As Heritage analysts have long recognized, re-importation-by which U.S. drugs are exported to a foreign country like Canada, subjected to price controls, and then re-imported to the U.S.-is bad health care policy. To begin with, it wouldn't work: drug companies would cut their sales to Canada, and Canadian pharmacies would stop selling to Americans-either because they don't have the drugs in stock or because their government forces them to, which has already begun to happen for gray market re-importation.

Still, allowing importation would be a foot in the door for government manipulation of drug prices in the United States, which would have a devastating effect on the quality of health care that U.S. citizens receive. Most apparently, re-importation would stifle drugmakers' spending on the research and development of new drugs, slowing or even ending recent years' constant and unprecedented pharmacological innovation. As America is the only major country now that does not regulate drug prices, turning off the spigot of innovation here would impact drug development worldwide.

Moreover, legitimate safety concerns about imported drugs remain unaddressed. Imported drugs may be counterfeited, unapproved, adulterated, or misbranded. Even with congressionally granted authority, the FDA would not have the ability to address these issues comprehensively.

The bottom line, as Nina Owcharenko, Senior Health Policy Analyst at The Heritage Foundation, has explained, is that support for drug importation is premised on a series of myths, none of which are true:

Importation will lower prices.
Importation will force other countries to pay their 'fair share' for drug development.
Importation is free trade, despite other countries' price controls.
Importation is safe.
Importation won't negatively impact research and development of new pharmaceuticals.

There is, unfortunately, no 'quick fix' for high drug prices-re-importation would make little difference while causing potentially great harm. A better course would be for Congress to focus on targeting assistance to low-income Americans who do not have health or drug coverage, and thus reduce the number of Americans without drug coverage, and for the Administration to negotiate with other countries to reduce or end their use of price controls on prescription drugs.