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The Lure of Cheap Drugs

The Washingto Post reports that the Maryland county I live in, Montgomery County, has finally answered the siren call of inexpensive Canadian drugs:

The Montgomery County Council voted yesterday to begin buying medications in Canada, joining a handful of local governments and nearly 2 million U.S. consumers in defying federal law.

The council’s decision will give as many as 85,000 county employees, retirees and their dependents the option of obtaining lower-cost “maintenance” medications from a Canadian vendor as soon as February. Proponents say the county could save as much as $20 million a year if members of its health plans fully embrace the initiative.

It should mean lower taxes for me, but somehow, I suspect they’ll find other places to spend the savings. Is buying drugs from Canada a good idea? It would seem foolish to buy drugs at home when cheaper drugs are available across the border. Unfortunately, this seemingly nearly-free lunch will not last long.

If Americans increasingly buy their drugs in Canada, one of two things will happen. Either the drug companies will stop selling drugs to Canadians at lower prices than in the U.S., or the Canadian government will stop allowing the export of drugs. A mix of these two events will probably occur. The end result will either be high prices in Canada or fewer drugs for Canadians. The benefits of low prices for Americans will disappear.

Those Montgomery County officials shouldn’t presume that the $20 million will show up every year.

The real effect of increased re-importation will be to make life very difficult for the Canadian government, the Canadian health system and citizens of Canada. I wonder if the Canadian government has caught on to this little problem.

On the positive side, the realization that drugs can be safely imported from Canada reduces the credibility and sacred status of the FDA.

I have a longer essay on re-importation here.