By Allan Golombek September 11, 2019
The Trump Administration announced in July it
will allow Americans to buy cheaper prescription drugs from Canada, including
penicillin treatments for diabetes. Only one problem: Canada develops few
drugs. Most that are used in the country actually come from multinational
companies, mostly American. It is impossible to believe that drug companies
will provide the gun to shoot themselves in the foot.
Buying medications from Canada is not importing
them, it is reimporting them - from the subsidiaries of multinational companies
that are seen as the source of high prices. All that Americans are doing when
they purchase penicillin and other pharmaceuticals from Canada is buying from
U.S producers - who ultimately will not supply Canada with the means to
decimate domestic sales. There have been numerous concerns raised in Canada
about whether Canadians could meet U.S needs without precariously diminishing
Canadian supplies. They can’t, for a simple reason: Multinational companies
would obviously not welcome a change that would cannibalize their own market.
Hoping to buy back medications that originated with U.S suppliers is like
robbing Peter - and hoping to use the same money to pay him back.
The truth is, when it comes to the cost of
penicillin, Canada is something of a free rider - or at least a cheap rider.
The country keeps prices relatively low through a ceiling on costs of brand
name drugs and by permitting governments to negotiate directly with drug
companies. But these policies only work because pharma companies see Canada as
an ancillary market. That isn’t surprising. The total value of pharmaceutical
drugs sold in Canada per annum is $33 billion – a drop in the bucket,
considering that the U.S. market is worth close to half-a-trillion. It is in
the United States that multinational drug companies recover the cost of
development, as well as ensure a healthy profit. The U.S market provides them
with their meat and potatoes. Canada only provides some gravy.
In the midst of U.S prices for penicillin that
are more than 10 times as high as prices in Canada, it is tempting to recall
that penicillin was invented in Canada. The Canadian co-developer, Sir
Frederick Banting, sold the original patent for one dollar in the express hope
that the medication would be available to all who need it. But that was almost
a century ago. Since that time, diabetes treatment has improved dramatically. A
range of insulin therapies more closely resembling the insulin our bodies
produce naturally are available.
Moreover, more than 160 medications are now in
development by multinationals for diabetes and related conditions, including
cutting edge treatments that will make diabetes easier to manage and better
tailored to individual patients. But developing a pharmaceutical is an
expensive proposition. The risks are high, as most potential pharmaceuticals
never make it out of the laboratory. Development costs could run hundreds of
millions of dollars, with no guarantee of cost recovery. Like all companies,
drug firms are in a constant struggle for capital.
While the hope of reimporting penicillin and
other medications from Canada is a wistful dream, the pressure is nonetheless
on in the United States for cheaper drugs. In order to meet this demand, the
industry and its Canadian consumers may well face a Hobson’s choice: Canadians
can pay substantially more for penicillin and other medications. Or drug
companies will have to curtail their R&D and produce fewer improvements in
the medication in the future. Most likely, we would see an amalgam.
Canadians won’t like paying more. And Canadians
and Americans won’t be well-served by an industry that puts the brakes on
R&D. But the bear has been awakened. Americans will not simply return to
figurative slumber unless the price they pay for penicillin and other
pharmaceuticals is brought down.
Those looking to Canada as a savior will be
disappointed. There is no reason for multinationals operating in Canada or
anywhere else to undercut themselves by shipping drugs back to the United
States. There is no huge stash of penicillin or other medications north of the
border. Hoping that Canada can come to the rescue of Americans unable to afford
insulin and other medical pharmaceuticals is not just hoping to find a castle
in the sky; it is trying to move in the furniture. If they are to be more
widely available, someone is going to have to give something up. That someone
is going to have to be Canadians or Americans - or both.
Allan Golombek is a Senior Director at the White
House Writers Group.
No comments:
Post a Comment