
U.S. to set up plan aimed at allowing prescription drugs from Canada - ilamont
https://www.latimes.com/politics/story/2019-07-31/trump-administration-drugs-canada
======
nostromo
Market-oriented people have long noted that the US medical consumer is funding
cheaper drugs for the entire world.

If we wanted a system that's more equitable, we could create a law that sets
the maximum price for medicine in the US at some multiple of what's charged
abroad.

For example: we could say that it's illegal to charge a US person more than 2x
what you charge for the drug anywhere else in the world.

This would do two things: it would bring down the cost for US consumers, and
it would increase the cost for consumers abroad -- effectively reducing the
free-rider effect we currently see in Europe.

~~~
dpatru
> we could create a law that sets the maximum price for medicine in the US at
> some multiple of what's charged abroad.

Why create more laws and complexity? Why not simply repeal the laws that
prohibit importation of drugs and possibly also refuse to enforce private
contracts prohibiting reimportation? The reason drugs are cheaper in Canada
and Europe than in America is because of American laws that prevent
importation.

~~~
nostromo
Because we not only want to pay less for drugs in America, we would like other
countries to pay a bit more too and help shoulder the cost of R&D for new
drugs and treatments.

An analogy: you live in an apartment building in which every other apartment
has rent control. Because of this you're going to pay every extra expense for
the entire building.

You could decide to become a rent controlled unit as well -- but the building
owners would have less money to improve the building, and it would fall into
disrepair.

Or, instead, you could try and find a way to get everyone to equitably share
the improvements to the building.

~~~
burn2theground
R&D costs are more than covered by the price paid in Canada and indeed most
nations; the US is merely funding massive pharma profit margins and fat
executive bonuses.

~~~
microcolonel
> _R &D costs are more than covered by the price paid in Canada and indeed
> most nations_

And you would know... how?

~~~
llukas
big pharma spends more on marketing than R&D:

[https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...](https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-
pharmaceutical-companies-are-spending-far-more-on-marketing-than-
research/?utm_term=.f9dd0ca251de)

~~~
microcolonel
> _big pharma spends more on marketing than R &D:_

So what? They clearly believe the marketing helps them make more revenue with
the drug; that has nothing to do with covering the cost of R&D.

Your argument would make sense if marketing reduced their ROI, but they
clearly believe it does the opposite.

I'm sure developers in San Francisco spend more on housing than on
professional/personal development, but that doesn't mean one is precluding the
other.

~~~
sprafa
I think it demonstrates pharma has excess cash. Also in countries where
there’s a public system pharma usually has 0 advertising because people have
no choice anyway.

~~~
chimeracoder
> I think it demonstrates pharma has excess cash.

It's only "excess cash" if you assume the ROI on marketing is negative, which
is a bold and unsubstantiated claim.

> Also in countries where there’s a public system pharma usually has 0
> advertising because people have no choice anyway.

Direct-to-consumer advertising is only one tiny portion of marketing. European
pharmaceutical companies spend massive amounts of money on marketing within
Europe.

~~~
sprafa
Why does RÓI have to be negative? Do you think that if marketing has good ROI
then whatever money they put in they get back, meaning it creates a positive
circle? Am I getting this right?

------
refurb
Canada is not so hot on the idea.[1]

 _" The Canadian medicine supply is not sufficient to support both Canadian
and U.S. consumers," the letter states. "The supply simply does not, and will
not, exist within Canada to meet such demands."_

[1][https://www.cbc.ca/news/canada/toronto/american-demand-
canad...](https://www.cbc.ca/news/canada/toronto/american-demand-canada-drug-
supply-1.5226871)

~~~
prepend
Fortunately that supply can increase.

Theoretically drug companies can close off the entire market or increase
supply. They’re prohibited from raising prices in the market. Since marginal
cost is so low, I expect that they’ll keep selling st increased volumes.

It’s a bit odd that the US is taking this tack instead of just regulating drug
prices domestically. But there’s a lot of odd things in the health system.

~~~
droithomme
_> instead of just regulating drug prices domestically_

Perhaps the hope is that US prices will fall, shortages in Canada might cause
prices to go up a bit there, but in the end the open market will equalize with
lower prices overall.

~~~
dmix
It will generate a significant amount of income for the Canadian economy and
create cheaper drug prices for tons of people. It might be bumpy at the start
as the supply side gets in line with the market, but it's better for both
sides in the long run IMO.

------
rayiner
Fun fact, Canada spends 1.76% of GDP on pharmaceuticals:
[https://data.oecd.org/healthres/pharmaceutical-
spending.htm](https://data.oecd.org/healthres/pharmaceutical-spending.htm).
The U.S. spends 2.04%. Cutting pharmaceutical prices to Canadian levels of
spending would save about $55 billion per year. Which is not nothing, but it
would reduce health care spending by just 1.6%.

If you look at dollars-per-capita, the difference is $389. That doesn't only
reflect the _price_ of the drugs, it also reflects the fact that Americans
might simply require more drugs than Canadians. For example, obesity rates
drive the need for drugs for blood pressure, cholesterol, etc. 25% of
Canadians are obese versus 34% of Americans:
[https://www150.statcan.gc.ca/n1/pub/82-625-x/2011001/article...](https://www150.statcan.gc.ca/n1/pub/82-625-x/2011001/article/11411-eng.htm).
That means we would spend a lot more on obesity-related drugs even if they
cost the same as in Canada.

~~~
tareqak
From your comment, I’m not sure if you are downplaying the high price of
medication in the United States or simply stating a fact, so I’m going to
clarify (apologies on my part). Reducing 1.6% of the aggregate healthcare
spending isn’t the full picture. That amount is not going to go to reduce the
price of over-the-counter Acetaminophen or over-the-counter Ibuprofen: it’s
going to go to things like grossly marked-up Epipens and the like.

~~~
rayiner
The point is that the amount of political attention paid to drug spending
vastly outweighs the actual impact of drug spending on the economy (or
peoples' wallets). My cynical take is that it's easier to fixate on an area
where you can demonize a small number of large companies, instead of looking
at the structural reasons why the U.S. spends _twice as much per person_ as
Canada on healthcare overall.

Okay, let's import all our drugs from Canada and save a few hundred dollars
per person on pharmaceuticals. Then let's get rid of all health-insurer
profits and save another $180 per person. Now what about the other $5,432 more
each American spends than each Canadian?

------
xxpor
Recently, PhRMA has been buying a bunch of promoted tweets in my twitter feed
claiming that 10% of drugs outside of the US are counterfeit. I'm sure the
timing is completely coincidental.

~~~
ProAm
Track and Trace stops that within the US

~~~
refurb
That's true, but track and trace is not setup for drugs imported outside the
country. The drug has to be packaged within the US for the appropriate
tracking codes to be added.

 _As we see it, there is no legal or operational way of transforming a drug
packaged for a foreign market into a drug that meets the U.S. requirements of
our in-progress track-and-trace system. What’s more, there is no way to alter
the law to enable importation without undermining the law’s purpose and
value._

[1][https://www.drugchannels.net/2019/07/our-stat-op-ed-state-
dr...](https://www.drugchannels.net/2019/07/our-stat-op-ed-state-drug-
importation.html)

~~~
prepend
Obviously it doesn’t work now, since it’s not legal to import drugs like this.
Why would we have a functioning system for an illegal activity.

I think it’s important for me to always mention how such a system would be
implemented u set new laws. Or why I think the proposed law doesn’t address
this need.

If I just say that it’s not currently done, it doesn’t help the conversation
much because it’s not a useful fact. Also there’s no drugs exported to Mars
and many other not relevant without additional info facts.

A new law will need to provide for this capability. All the laws I’ve seen
addressed drug safety in one way or another. But curiously I hear the
complaint about safety brought up without the compensating strategies also
brought up.

~~~
refurb
Considering the implantation of track and trace in the US start nearly 6
years, I don’t think it’s fair to say “it’ll be solved easily”.

~~~
prepend
I don’t think it will be solved easily either. But I think it will be
mitigated enough that the benefits outweigh the harms.

~~~
rjbwork
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Isolate-p106502415) Here is the link. I have not bought it but it looks legit
to me.

------
e1ven
I'm all for solutions that lower drug prices in the US.

Wouldn't mass-importation from Canada encourage drug companies to raise
Canada's pricing to match US levels?

That seems like something Canada wouldn't be particularly fond of.

~~~
Scoundreller
Canada’s pricing basically works like this: manufacturers are allowed to
charge the median price of industrialized countries.

~~~
e1ven
I understand that's their current policy.

If the US began importing high quantities of drugs from Canada, what prevents
Pharma companies from insisting that Canada pay current US prices?

If Canada declines, the companies could stop selling in Canada.

I would think in many cases the profit from selling in Canada at all is less
than what they'd lose from allowing them to be imported to the US.

~~~
Scoundreller
Then Canada goes back to its old system before the current one: Compulsory
Licensing.

Anyone can manufacture any patented drug and just pay the patent holder an x%
royalty.

It works ok for playing songs on the radio.

~~~
e1ven
Sounds reasonable to me. I'd be in favor of such a system.

I think if the US were importing large quantities of drugs, they would be
forced to move to that system.

But if you think that there is the political will to do so, I think that could
work out rather well.

Thanks.

~~~
Scoundreller
The best part about the system is that it uses big corp’s Hollywood accounting
against them.

Oh, per your US tax return, we see that you earned 0.4% profit on your US
sales last year. You’d be fine with a 1% royalty after we sell it for half
price, right?

~~~
mirimir
That would be awesome.

------
arcticbull
What's to stop drug companies from prohibiting re-export from Canada as part
of their sale/negotiation with Provinces? This is an absurd idea. Canada gets
lots of its drugs from American companies, why on earth would they permit re-
export and undercut themselves? Refusing to address the real problems in the
US market and relying on Canadian provinces to negotiate bulk discounts on
behalf of American states is almost surreal.

That drug pricing is America's problem, not Ontario's, is a phrase I never
thought I'd type out haha.

------
mwambua
I should probably do the research for myself, but is there a simple
explanation for why it's easier to allow importation from Canada than to lower
domestic prices in the US?

~~~
rtkwe
Prices are low in Canada because they have the negotiating power of the entire
country behind their single payer system driving prices down. To do the same
in the US would require taking on the very powerful (because they have huge
piles of cash from drug prices being so high) pharma lobby and getting it past
the rabidly pro business Republican party. The only real way to do it would be
a) move to a more centralized insurance system to negotiate prices (did you
know Medicare the largest insurance in the US can't legally negotiate the
prices it will pay for drugs?) or b) have legal limits on the prices of drugs
set by fiat.

I'm dubious this is going anywhere, it seems like a ploy to get some talking
points for the election in 2020.

~~~
replicatorblog
United Health Care, one of the largest private insurers in the US covers more
lives than the Canadian Government and has every incentive to negotiate low
prices.

This simple answer is satisfying to many who otherwise prefer single-payer
plans, but doesn't really hold up to scrutiny

~~~
mrfredward
Health insurers in most states are subject to a minimum loss ratio that says
they must payout 85% of the premiums they take in. Insurers operating near
this cap actually have an incentive to pay out more money in order to raise
the cap on their profits.

~~~
lotsofpulp
Then competing insurers can steal their insureds away with lower premiums. The
caveat is that we must abolish employer sponsored healthcare, dump everyone on
healthcare.gov, and provide a sufficient pool of healthy lives to make
providing insurance viable.

------
flyingfences
Maine had a law allowing these imports (and imports from a few other
countries) that was struck down as a violation of federal supremacy. While it
was in effect, though, it was certainly appreciated by Mainers.

------
btbuildem
As a Canadian, I will press my representatives as hard as possible to prevent
this from happening. It can only impact our healthcare system negatively -- no
thanks.

------
guardiangod
As a Canadian this is really weird. US, the wealthiest and most powerful
country in the world, will now grey-market import/smuggle drugs from freaking
_Canada_. All because the US, land of exception-ism and capitalism, couldn't
stop pricing gouging. Now US is expecting Canada to supply the entire US'
medical drugs' demand. When did Canada become responsible for the well-being
of US citizens?

This is akin to asking Hong Kong to supply the entire China's demand for baby
formula. This did not end well for HK.

Edit: Oh sure, down-vote me into oblivion.

~~~
ddingus
Fair questions!

Agree with you, this is likely all bad for Canada. (Sorry to be a bad neighbor
mate)

But, the discussion is likely a net good all around. Just in this thread I see
lots of new info. Many things I did not know about the US and Canada and how
drugs work economically.

Better informed people is likely to be a good thing.

------
baybal2
Question, if Canadian drugs are finally OK, why not Indian or anybody's else
drugs for that matter?

In any normal country private importation of whatever you want not explicitly
prohibited is not a state's f*ing business.

~~~
HNisCurated
I have considered this. While many people worship regulations, I'm willing to
take the "risk" of using foreign medication.

I wish I could take the same risk when I get hydrocortisone, but instead I
need to pay a physician for a prescription, a pharmacist to fill, and the
clinic that stores everything.

Lots of middlemen for something that should be sold on Amazon.

~~~
pkaye
Is this hydrocontisone stronger than the over the counter variety?

~~~
xnyan
1% is OTC strength, it can be prescribed at 2.5% which I believe requires a
consult with some kind of medical professional in most countries.

------
sunshinelackof
As an American this is pretty embarrassing. Somehow trying to absorb the
benefits of another government's regulation and billing it as creating a
"freer" market is more popular than solving the problem here? I don't buy it,
I can't imagine a lot of other people really do either. I'm also not sure that
it would even work. That is supposing Canada wouldn't respond to lukewarm
hostility with measures to counter this. It feels like we're civically brain-
dead. Said sitting on a stash of decade old epi-pens.

------
docker_up
All this will do, unfortunately, is cause drug companies to raise prices in
Canada. There's no way that drug companies will allows this loss of revenues
from the US.

------
ilaksh
Why not Mexico also? I'm guessing racism or people will say they are fake
drugs. Since I moved to Mexico about 10 months ago my health problems have
been treated with Mexican-bought medication only and my symptoms have not
gotten any worse. Except for when I run out and need to get more.

I mean there are places like Walmart, some pretty large pharmacy chains, etc.
It seems like people would not tolerate a significant amount of counterfeit
medication.

~~~
nullwasamistake
Northern Mexico is super dangerous so realistically you would have to fly. And
I don't think the TSA will like you carrying a multi year supply of meds back
to US

~~~
ilaksh
I live in Tijuana and it's actually not super dangerous unless you go to a bad
neighborhood. Sure, relatively statistically speaking, there is a higher
chance of something bad happening. But it is still a very tiny chance if you
stay within nice neighborhoods and are just trying to buy medication. By the
way, unfortunately the only part that of Tijuana that a lot of Americans see
is the one designated for maximum debauchery and is one of the worst
neighborhoods.

The pharmacies right by the border are fine, but if you want a nicer area,
walk across the PedWest crossing and stand in the Uber waiting area for an
Uber to go to Playas. Then you can go somewhere like Farmacias Roma or
Farmacias del Ahorro or a bunch of other nice stores with people wearing lab
coats. You could also just go to Walmart for medication if you want but
recently they seem to be missing basic things I needed so they probably aren't
the best.

~~~
nullwasamistake
Border towns might be a decent idea. I was only considering crossing northern
Mexico by car which natives visiting the US have told me is something they
never do.

~~~
ilaksh
Well I would not want to drive in TJ because the signs are in a different
language, people drive differently, giant potholes, other issues.

------
beepboopbeep
No need to fix the crisis at home, just leach off of other people who are able
to get their shit together.

------
mirimir
OK, so I live in the US. And I take lots of drugs. Some of which are priced
obscenely. So I buy some drugs through online pharmacies, and it's mailed to
me. Mostly from Asia.

------
testplzignore
How is this different than the existing importation of generic drugs from
places like India? Is it that this is cutting out the US middleman in the
transaction?

------
crb002
Or change Medicaid rules to price compare a company's drugs globally as by law
they have to offer Medicaid their lowest price.

------
neonate
[http://archive.is/qPREl](http://archive.is/qPREl)

------
robomartin
Every time I watch or read a debate on US healthcare issues the debaters
conveniently ignore a reality that every single entrepreneur dealing with
physical products is keenly aware of: Cost drivers

Doing business in the US is very expensive. In the case of pharmaceuticals we
have high regulatory costs and, perhaps worst than that, high legal costs.

If you want to develop and sell a medical device in the US you have to accept
the fact that it will take a ton of time and money to deal with the FDA. Not
trivial, at all, even for relatively simple products (say, basic hearing
aids).

Worse than that, once you enter the market you have to expect the near
certainty of having to face one or more nasty lawsuits. Medical product
manufacturers, be it drugs or hardware, get pounded with lawsuits. From
someone manufacturing a simple cane to prescription drugs. Lawsuits are so
common most companies have complete legal departments on staff.

Given that reality, yes, definitely yes, there will be a difference in cost
when selling drug A in the US vs. Canada, Peru or Italy. No question about it.

Yet, during debates between politicians all we hear about is how changing
health insurance in one direction or another will reduce healthcare costs.

That's just nonsense. It has to start with tort reform and educational loan
reforms that reduce the cost of education. A doctor graduating with $300K in
debt has no choice but to charge very high fees for his or her services.

Now fill a hospital with people with multi-100K student debt and see if you
can lower operating costs. Add to that an expensive regulatory framework and
even more expensive legal landscape and the answer is simple: You can't. It
doesn't matter how you twist and contort health insurance. If the underlying
cost structure is high, no amount of magic hand waving is going to make things
better.

That's our problem.

There's an asymptotic lower limit to what medical professionals have to earn
in order to have a life. And there's another asymptotic limit to what the
entire medical industry service and supply chain, from component suppliers to
OEM's, doctors and hospitals have to charge in order to deal with regulatory
and legal costs. Pretending none of this exists while talking about health
insurance is kind of silly.

If you bring prescription drugs in from abroad, it will not take long until a
MOAL (Mother of All Lawsuits) costs someone a ton of cash and imported drugs
become just as expensive as anything else gotten locally.

Nobody seems interested in addressing the real issues, probably because he
political value isn't as clear as beating on the low hanging fruit, even when
this will fix nothing.

Ever wonder why we've been talking about healthcare reform for decades and
nothing ever really changes? Well, now you know.

------
OrgNet
Like it or not, the Trump administration has good ideas

------
zackmorris
I don't have confidence that the Trump administration will pull this off,
because I watched the George W Bush administration punt it in 2002:

[https://www.nytimes.com/2002/07/18/us/plan-import-drugs-
cana...](https://www.nytimes.com/2002/07/18/us/plan-import-drugs-canada-
passes-senate-but-bush-declines-carry-it.html)

The real reason that prescription drug prices in the US don't match the prices
seen in other countries is that patients in the US have no leverage in demand
like that seen in supply. When a market has a power imbalance where the
producer has a near-infinite production capacity (drugs cost infinitely less
to manufacture than discover) and monopoly protections (pharmaceutical
patents), then the consumer is at the whim of the producer and will
eventually/inevitably pay whatever price the producer demands.

This is econ 101 stuff.

What we need is an advocate to organize consumers so they have leverage over
producers and can set a bulk price. This would also work in any industry that
has a natural monopoly like water, electricity or (gasp) telecommunications:

[https://en.wikipedia.org/wiki/Natural_monopoly](https://en.wikipedia.org/wiki/Natural_monopoly)

Note that we aren't talking about why electricity costs $10 per kilowatt hour,
because decades ago we didn't have the "government is bad" mentality
introduced by the Reagan administration, so Carter was able to form the US
Department of Energy (and really various energy commissions had made the
electrical grid part of the commons decades before that).

So this proposal of importing prescription drugs (whether it happens or not)
is only looking at the supply side, and for the reasons I listed above, will
certainly fail eventually.

The reason the rest of the world is eating our lunch is that they have no
qualms about bolstering the demand side. That may mean: using a single-payer
system instead of insurance companies, limiting the prices of key drugs,
regulating pharmaceutical companies at a deeper level than what is done in the
US, producing drugs at the state level (whether they're patented or not), or
some combination of these and other measures that put consumers on an even
playing field with producers.

Now, we could look at US insurance companies as being an advocate to keep drug
prices down. But someone realized decades ago (indeed, as early as Nixon's
Health Maintenance Organization Act of 1973), that a pool of money that large
is ripe for exploitation and corruption. It was predicted very early on by
(labor/leftists/Keynesians/socialists/radicals/insert boogeymen here) that we
would find ourselves in the situation we're in now. It's just that wealth
inequality wasn't at nearly the levels we see today, and older folks from the
WWII generation felt a certain patriotic duty to rip off the rest of the world
instead of their fellow Americans, and we still had a manufacturing base in
the US so we didn't fall into these zero-sum games of squeezing profit from
stone.

Ok that last paragraph was fairly opinionated on my part. But as the
influencers of the tech world, you owe it to yourselves to be informed and
know the history of this stuff so that you don't get distracted by the
dilluted messaging that keeps people ignorant and divided. Stick to first
principles, use critical thinking skills to discern where power imbalance
leads to corruption, and find a way to convey what you have learned to people
hungry for insight. For me that's the basic supply/demand dichotomy and how it
breaks down in natural monopolies, but maybe there are better hacks out there.

