BUY-CANADIAN IS A DOOMED OPTION
As the Trump Administration takes on the issue of drug prices, they should pay close attention to a recent report by the Healthcare Distribution Alliance (HDA) detailing the disastrous implications of a “buy-Canadian†policy. Implementation of a “buy-Canadian†policy would present innumerable regulatory hurdles, costing us $1.1 billion to implement the required federal oversight alone. Even still, these drugs would likely fail to meet essential federal safety and quality standards. “It is clear that the risks and costs of prescription drug importation may outweigh any perceived benefits,†the HDA concludes.
On top of that, legislating the coordinated importation of medicine for an entire nation is very different from individuals intermittently crossing the border to make their own purchases. Canada has a population of roughly 37.7 million—less than California. It’s little surprise then that Canada perceives this move by the Trump Administration as a “clear and present danger†to their already-overburdened healthcare system.
Canada is already unable to maintain an adequate supply of medicine to meet the demands of their own citizens. If even half of America’s elderly population began purchasing their prescriptions from Canada, their supply of essential drugs would rapidly deplete within a couple months.
Moreover, drug companies who depend on U.S. sales profits are likely to notice that medicine sold to Canada is being rerouted and may threaten to end or condition sales on the drugs not being exported to the U.S. This casts substantial doubt on the purported benefits to importation, while the consequences would be formidable.
Economically speaking, there is little difference between price controls and drug importation. Just as wage laws control the price of labor, importing drugs is the government artificially lowering the cost of drugs below the market’s naturally occurring equilibrium price. And an artificially created price ceiling will inevitably create an excess in demand and a shortage in supply.