21 Jul 2003 Nasty Debate Over a Nasty Idea

The issue of allowing prescription drug reimportation probably seems boring to a lot of people, but it has been one of the hotter — even divisively nasty — topics in conservative circles in Washington over the past week.

In an editorial July 21, the Wall Street Journal took the position, which I share, that allowing drug reimportation is a bad idea, but it also — gratuitously, I thought — went out of its way to slap drug companies, saying “We don’t have much time for the pharmaceutical industry’s contention that such imports would pose a significant health risk to American consumers.”

The WSJ had so little time; it didn’t bother to tell readers why it doesn’t believe safety is an issue.

Our Ed Haislmaier, in a paper we just published, had enough time to develop a different view. He reports, in part:

Last month, three California men pleaded guilty to charges of selling and wholesale distribution of fake Procrit, an anti-anemia drug. The perpetrators of the fraud were passing off vials that “contained only bacteria-tainted water” to unsuspecting pharmacists and patients.

Other recent cases involved criminals selling fake versions of Lipitor (a cholesterol lowering drug) and Serostim (a growth hormone often used to treat AIDS wasting); passing off sterile water as Neupogen (a drug used to treat cancer patients) and aspirin as Zyprexa (a drug for schizophrenia) and selling tampered vials of Epogen diluted to 1/20th strength (like Procrit, Epogen is used to stimulate red blood cell production in cancer and AIDS patients).

In the Epogen case, an FDA official noted that, unwittingly, “a major wholesale distributor was holding approximately 1,600 cartons of counterfeit product,” while the Florida health inspector on the case reported “25,000 patients received a one-month supply of diluted drugs.”

The problem is much worse overseas. Counterfeit drug sales are rampant in many Third World countries. Also, both at home and abroad, organized crime is getting into the act. It has discovered that the profits from faking legal drugs are as big as those from selling illegal drugs, while detection by the authorities is less likely and the penalties, if caught, are much lighter. In any country, conviction for selling fake pharmaceuticals will get you a fine and maybe some jail time, while in some countries trafficking in heroin carries the death penalty.

Advocates of easier drug importing argue that new tamper-resistant technologies and tracking systems will keep the crooks at bay. But, given the lengths and sophistication some criminals go to in producing counterfeit money, there’s no reason to think they won’t also buy, steal or fake whatever is needed to make the packaging of fake drugs also look real. And that is without a hostile government getting into the act, as has often been the case with currency counterfeiting.

I also recommend a Weekly Standard piece written by John E. Calfee of the American Enterprise Institute, which says, in part: “…price controls would end up suppressing innovation here, just as they have done abroad. It is one thing for the Canadians and Europeans to free-ride on American R&D, but we can’t free-ride on ourselves. The system that gave us the drugs the whole world wants would be hobbled just when researchers are finally glimpsing pathways to cures for cancer, Alzheimer’s, and other killers.”