As I have pointed out here, Ron Paul voted to allow prescription drug re-importation. This puts the good doctor right in line with Hillary Clinton and the other Democrats running for President. According to John Lott, this policy would put real human beings at risk:
All Democratic presidential candidates agree on pharmaceutical price controls, which means people will die.
What does re-importation have to do with price controls? Well, if we import drugs from countries that allow government bureaucrats to ignore the market and set arbitrary prices, we will be importing their price controls. And, as Lott phrased it for the Cato Institute:
The bottom line is if the government restricts the profit potential for a drug company, that company will have fewer incentives to produce life-saving medicines.
Like it or not, the profit motive is what drives innovation. It is what gave us the light bulb, the telephone and the low-cost computer at which you are now staring. It has also produced the “miracle cures” that we increasingly take for granted.
So, when Ron Paul, Hillary Clinton, and other self-serving politicians tell you they want to re-import drugs, what they are really saying is that they are willing to sacrifice you or one of your loved ones on the alter of statism.
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If the drug companies don’t like the prices set for their products in Canada, they should refuse to sell their drugs in Canada.
Having capitulated to price controls in Canada, they’ve created the grey market by their own action.
If a Canadian owns prescription drugs and wants to sell them to an American, it is a property rights abuse and a economic freedom abuse to make that transaction illegal. I can understand the impulse to do it, because of natural resentment over Canada’s oppressive dealings with pharmaceutical firms. But the place to fight that is at the point of sale, not at the point of re-sale. Once you sell something you have no more claim to it and using the apparatus of government to interfere with grey market operations is just as bad as the government setting the price controls in the first place.
Posted 17 Aug 2007 at 11:06 am ¶What miracle “Cures” have the pharmaceutical companies produced in the last 30 years? I know of “treatments” they have discovered, not aware of any cures though.
Posted 17 Aug 2007 at 11:12 am ¶Once you sell something you have no more claim to it.
No one is saying that the drug companies have a claim to a product they have already sold. The point is that our government should not be abetting Canada, et al in their wrong-headed price controls.
Posted 17 Aug 2007 at 11:15 am ¶This argument is thin. Although government price fixing no doubt accounts for *some* of the differences in drug prices between countries, the primary driver behind differential pricing is the differences in wealth (and hence demand curves) in different countries. It is true that if we don’t restrict reimportation, drug companies will not be able to maximize profits through differential pricing - and further, that if forced to adopt a single, profit-maximizing price worldwide, they will choose a price that leaves the poorest consumers unable to afford the drugs. However, banning reimportation of drugs is not a libertarian solution, nor does allowing it somehow make libertarians complicit in any government price-fixing that led to the situation. If you do want a libertarian solution that permits differential pricing, look to things like contracts and EULAs - this is more or less what airlines have done with their tickets (albeit in a cheesy underhanded way).
Posted 17 Aug 2007 at 11:18 am ¶Also, worldwide competition is good thing for us as consumers. Brazil spent years negotiating drugs for it’s HIV patients and threatened to bypass the patents and make the drugs themselves. They have now stopped negotiations and are making their own drugs now. This was because Merck wouldn’t sell Brazil the drugs at the same price Merck sold them to Thailand. For some reason Merck thought that it was ok to triple the price for the country of Brazil. I wonder what price they sell it to the USA?
I’m all for capitalism and making the most money as you possibly can. However, there are so many regulations and bureaucracies that it forces the Pharmas inflate the price to make sure they get their ROI back. The problem is our system is deficient. We are our biggest enemies and then we try to fix it with more laws and more regulations.
We have huge subsidies and government contracts to the pharmaceutical companies. I say it’s time we stop subsidizing these companies and reduce the red-tape so we can really open up the market. Reduce the red-tape and you’ll see more innovation.
Posted 17 Aug 2007 at 11:35 am ¶Ron Paul is against the federal government getting involved in the people’s business. This is the exact opposite reason the democrats are for drug re-importation.
Ron Paul would create a mucher freer market that drug companies would have no problem innovating and thriving in.
Our government should not be involved in free trade between anyone. The issue would quickly find a solution between Canada and the drug companies if their profits were threatened.
Posted 17 Aug 2007 at 11:37 am ¶… nor does allowing [re-importation] somehow make libertarians complicit in any government price-fixing …
That’s like saying allowing embezzlement doesn’t make you complicit in the crime. And your point about differential pricing, while reasonably accurate, is not especially relevant here.
Posted 17 Aug 2007 at 11:39 am ¶If reimportation of drugs was allowed, the government would not be “abetting” the Canadian system of price controls.
All they’d be doing is refraining from protecting the pharmaceutical companies from the consequences of capitulating to the Canadian extortion.
Actually, banning re-importation is what abets the price fixing scheme. A pharmaceutical firm faced with a price fixing demand in one country, in the absence of the possibility of re-importation, is incented to give into the demand, and make up their losses in markets with no price fixing. They can’t make up those losses as effectively if they can’t maintain a wall around the higher-price markets. Faced with an avalanche of reimported drugs from Canada, the pharmaceutical companies might stop calculating that playing ball with Canada’s demands is the smartest business practice. If they knew those drugs were going to come back in to the US via the grey market, they would be properly incented to tell Canada to stick it.
Posted 17 Aug 2007 at 12:06 pm ¶Actually, banning re-importation is what abets the price fixing scheme.
Fluffy, this is the equivalent of blaming a woman for her own rape.
Faced with an avalanche of reimported drugs from Canada, the pharmaceutical companies might stop calculating that playing ball with Canada’s demands is the smartest business practice.
Nope. There is no negotiating with governments, particularly when they are all (directly or indirectly) participating in price controls. Allowing importation would simply incent the drug companies to take their money and begin investing in products and services on which they get a decent ROI.
Posted 17 Aug 2007 at 12:39 pm ¶If we do allow reimportation from Canada the price will barley move. The reason is that Canada is on allocation for its price controls. So a few in the US get drugs that are supposed to go to Canadians. The result is that the drug shelves in Canada go bare but prices in the US stay the same since the supply only changes by less than 10%. Price controls then fail in Canada and the Canadian black market supplies drugs at US prices plus cost of business.
Posted 17 Aug 2007 at 1:19 pm ¶‘Like it or not, the profit motive is what drives innovation’
You have a touching naivety about the pharmaceutical industry, which in truth is mainly interested in treatments for the primary profitable chronic conditions, churning out variations on a theme. Meanwhile academic clinicians are crying out for resources to support truly innovative research. Much innovation orginates in state funded academic labs. Go read your history of DNA.
Posted 17 Aug 2007 at 3:44 pm ¶PS - John Lott, for those who don’t know, is the man who reckons concealed weapon carry decreases gun crime, and who faked someone called ‘Mary Rosh’ to promote his work. Catron is presumably an admirer.
Posted 17 Aug 2007 at 5:22 pm ¶John Lott, for those who don’t know, is the man who reckons concealed weapon carry decreases gun crime …
Can we assume that your reversion to this ad hominem BS means you have no intelligent response to his point?
Posted 17 Aug 2007 at 7:37 pm ¶It also puts him in line with the Constitution.
Posted 18 Aug 2007 at 1:20 am ¶If you need a nanny to make health care decisions for you, then hire one yourself, it’s not what the Federal government is for! And if other governments want to do something stupid like price controls, it’s not our government’s job to regulate them either!
Posted 18 Aug 2007 at 1:57 am ¶Someone should want to kill you for being so ignorant.
Anyone who wants to know the truth about Ron Paul and what he stands for, without the insane ramblings of the author of this blog should go to youtube and find some videos of him speaking. Once you have done that, go to http://www.teaparty07.com and http://www.ronpaulforums.com and make a difference.
Posted 18 Nov 2007 at 10:27 pm ¶Post a Comment