Surprise! New Importation Bill Introduced

Sometimes, I don’t like being right.

In Tuesday’s post, I highlighted that unsafe drug importation is supported by both President Obama and Governor Sebelius, his latest nominee for Secretary of Health and Human Services.

One day later, Senators Byron Dorgan (D-ND), Olympia Snowe (R-ME), John McCain (R-AZ), and Debbie Stabenow (D-MI) introduced this year's model of the Pharmaceutical Market Access and Drug Safety Act (S.525).Fans of redundancy will recall 2007's S.242.

The festivities included the obligatory misrepresentations and falsehoods about cost savings and safety by the pro-importation lobby.

Sigh.

It’s really a shame that the public perception of pharmaceutical manufacturers is so low that no one recognizes the supply-chain dangers of cross-border importation. As someone who studies drug distribution, I believe that politicians are abdicating their responsibilities and endangering public health by opening up diversion doorways for criminals.

UNSAFE

Let me be clear:

1. Diversion is the sale of a drug outside of the distribution channels for which it was originally intended, as in “made to be sold in Europe but diverted to the U.S.”
2. Drug diversion is the primary way that counterfeit drugs get into legitimate pharmacies. Just ask the FDA’s Office of Criminal Investigations.
3. Importation and parallel trade are – by definition – diversion.

Over the years, I’ve given you plenty of examples, such as Diversion from Canada via China, Canadian Dreamin', or even Crazy Talk from John McCain (a co-sponsor of S.525). Now we can get ready for fun headlines in the US such as “30K Fake Drugs Dispensed to Patients.” Wheee!

IMHO, Manufacturers should begin scrutinizing their wholesaler agreements with importation in mind. Trade relations and commercial relations executives should pay particular attention because the legislation explicitly limits the way a manufacturer can structure its U.S. distribution agreements. (Contact me privately for more details.)

NOT CHEAPER

Importation will open up new gateways for counterfeits but won’t save us much money because the price differences will be absorbed by the middlemen. See Importation Illusions.

Check out how Senator Dorgan blatantly twists the conclusions of a CBO study. Yesterday’s press release from Senator Dorgan’s office states:

"The Congressional Budget Office estimates the bill would save American consumers $50 billion over the next decade, including more than $10 billion in federal government savings.”

Alas, the press release deliberately omits the CBO’s actual conclusion. If you care, here is the 6-page CBO report: Would Prescription Drug Importation Reduce U.S. Drug Spending?

The very first paragraph states:

“On the basis of its evaluation of recent proposals, the Congressional Budget Office (CBO) has concluded that the reduction in drug spending from importation would be small.”

I hope that the journalists who read this blog are paying attention.

In the meantime, I remain surprised that Senator Dorgan's nose does not appear to have grown.

[Update: See my subsequent post More on Drug Importation Economics for details on two more recent CBO studies.