Oy Canada! Trade's Non-Solution to "The Problem" of U.S. Drug Prices

Article excerpt

HORSTMAN: Mr. President, why did you block the reimportation of safer and inexpensive drugs from Canada which would have cut 40 to 60 percent off of the cost?

BUSH: I haven't yet. Just want to make sure they're safe. When a drug comes in from Canada, I want to make sure it cures you and doesn't kill you.

KERRY: John, you heard the president just say that he thought he might try to be for it. Four years ago, right here in this forum, he was asked the same question: Can't people be able to import drugs from Canada? You know what he said? "I think that makes sense. I think that's a good idea" - four years ago. Now, the president said, "I'm not blocking that." Ladies and gentlemen, the president just didn't level with you right now again. He did block it, because we passed it in the United States Senate. We sent it over to the House, that you could import drugs. We took care of the safety issues. We're not talking about third-world drugs. We're talking about drugs made right here in the United States of America that have American brand names on them and American bottles. And we're asking to be able to allow you to get them.1

I. INTRODUCTION

This bit of recent political history is ideal in this regard, if no other: It vividly encapsulates a public dispute considered important at the time of the campaign and-at least thus far-throughout the presidential term at issue in that campaign. Thus, we begin with a parochial perspective on one corner of United States (U.S.) international trade policy; that is, many U.S. citizens would prefer to import, or "reimport," their prescription pharmaceuticals from Canada, although such importation is not permitted under federal law.2 Because the federal law in question was duly enacted pursuant to the powers granted the federal Congress under the Commerce Clause of the U.S. Constitution, the federal ban preempts any putative state law statutes and regulations to the contrary.3

The fact that such cross-border trade is prohibited has been a source of ample public controversy on both sides of the U.S./Canada border. Within the United States, a widespread perception of cross-border price disparities is discussed frequently and prominently in the national press;4 it is debated in our presidential campaigns;5 and it is an ongoing source of federal and state legislative activity.6 Indeed, Congressional consideration of-and qualified support for-certain forms of parallel trade in pharmaceuticals has become the Bill that will not die (or live either). Congress, across two presidential administrations, has repeatedly authorized certain drug re-importation schema, contingent on the approval of the U.S. federal Food and Drug Administration (FDA).7 FDA has not, as yet, granted such approval, and one may wonder about the extent to which FDA stinginess in that regard has-or has not-come as a surprise to Congress.8 The topic has been similarly controversial in Canada, albeit for somewhat different reasons.9

Within the United States, the debate typically is cast as President Bush and Senator Kerry cast it; that is, as a risk management problem of safety versus cost, with substantial disagreement about the accounting particulars of the fundamental variables.10 In that regard, the puzzle is, as one subcommittee of Congress succinctly put it: "Are Americans being protected or gouged?"11 The question appears simple, although on its face are complex technical issues of drug safety, as well as questions about regulatory integrity, competing (pharmaceutical) market systems, and equity in international trade policy. Not far beneath the surface are questions about the scope of the intellectual property (IP) protections afforded to pharmaceuticals, as the most significant price disparities are observed with respect to certain patentprotected drugs or drugs afforded some other measure of exclusivity in the market.12

What drug re-importation advocates propose is a special case of "parallel trade. …