So You Want Our Country to Be Self-Sufficient in Medical Supplies, Do You?

by Don Boudreaux on April 27, 2020

in Current Affairs, Health, Question for Protectionists, Seen and Unseen, Trade

If you do advocate a policy of medical-supply self-sufficiency for the country, I pose – in my latest column for AIER – only a few of the many challenging questions that you must first ask and then answer substantively before anyone is under any obligation to take your demand seriously. A slice:

3. Suppose that researchers at Sinopharm Group, China’s largest pharmaceutical company, develop – and patent – a blockbuster drug that cures leukemia. Should we refuse to import this drug given that importing it would mean that we Americans are no longer self-sufficient in medical supplies? What if a research team at Boehringer Ingelheim, one of Germany’s biggest pharmaceutical firms, invents – and patents – a kidney-dialysis machine that sells for half the price of existing machines and cuts each patient’s time on the machine by 75 percent? Should our wish to remain self-sufficient in medical supplies prevent us from importing any of these new machines?

4. In 2019 we Americans imported $193.1 billion worth of medical products. No country imported as much as did ours. Americans’ large volume of such imports, when combined with purchases from the rest of the world, enabled foreign manufacturers to produce, for selling globally, drugs and devices on larger and more-efficient scales than would otherwise have been profitable. Production on these larger scales, in turn, reduces the per-unit costs and prices of many of the drugs that we import.

And so if we were to produce for ourselves all that we now import, our manufacturers will not find it profitable to produce these products on such large scales. The cost to us Americans of producing ourselves all that we now import would thus be higher – likely substantially higher – than the nearly $200 billion that we now annually spend on imported medical supplies.

These higher costs, of course, would raise the prices that Americans pay for health care – a reality that prompts this question: What is the maximum price, in terms of a rise in health care costs, that Americans should be forced to pay for self-sufficiency in the production of medical supplies (or ‘essential’ medical supplies)? Is self-sufficiency worth whatever price we must pay to obtain it? If not, can those who plead for such self-sufficiency give us practical guidance on what is the price beyond which self-sufficiency might no longer be worthwhile?

Comments

Add a Comment    Share Share    Print    Email

Previous post:

Next post: