Thanks to my sometime colleague Rob Port, I see that the Democrats in Congress, feeling their oats, are thinking again of allowing the importation of cheap drugs — but it’s not on their front burner.
This is yet another one of those ideas that sounds good at first, but when you start seeing the details, you realize just how bad an idea it is.
Yes, a lot of drugs are cheaper in other countries than here in the US. And yes, they are often the very same drugs we can get here. And yes, some of them are even made in the US and sent to those other countries.
So, why are they so much cheaper than they are here? How the dickens could it be cheaper to get the drugs through, say, Canada, than just buying them here outright?
The answer is simple: socialized medicine. Those drugs are cheaper in those other countries because the governments of those countries says they will be. The government sets the prices of those drugs, and the manufacturers have a simple choice: sell at those prices, or not do business in the country at all.
The people calling for the re-importation of these drugs are being remarkably disingenuous. They want the government to control the prices of drugs, but they know they can’t get the American people to go along with it — at least, not yet. So they have discovered this solution to get the benefits of socialized medicine, without having to pay the price. It’s “socialism lite.”
The only problem is that the free market has a way of dealing with such clumsy attempts to manipulate it. One solution immediately springs to mind.
The drug makers put up with the price-fixing in those countries because they still do make a profit, usually off the sales of other drugs. They know that the price-fixing is part of the “cost of doing business” and mark it off as such.
But what happens if the demand for drugs with little or no profit margin (I believe that some are actually sold at a loss) skyrockets? Why, if I was running one of those drug companies, I’d just stop making and importing so much of those restricted drugs. I’d cut back the supply to be enough to just cover the actual Canadian demand (Canada being the most frequent example, and the subject of most of my “prescription drug” spam), with a little safety margin, and then let the Canadians decide if they want to sell to their own customers, or to Americans. It won’t take long before the Canadian government itself starts putting curbs on exports of drugs to protect its own citizens, and there goes the supply of cheap Canadian drugs.
And if the Canadian government tries to force the drug-makers to keep up the supply? Then they can simply stop making and importing ANY of the price-controlled drugs. Worst comes to worst, they can simply stop doing business in Canada altogether.
Whenever the government tries to micromanage commerce, it almost always ends the same: the consumers the government is trying to “help” gets screwed.
And that’s what will happen in this case.
