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Mr. President, stay the course.

Robert Goldberg, Ph.D.
November 12, 2004

Mr. President, America has a drug problem and you're going to have to spend some of that political capital you earned this November to fix it if you want to get to work on some of the other important goals you have set for this country.

I am not talking about drug addiction. I am talking about the fact that over the past several years, and particularly during the last election cycle, the national discourse over prescription drugs has become so shorn of facts and reason that only your leadership can ensure that America remains the world's leader in developing better medicines for treating disease.

I could see your exasperation with Senator Kerry when he kept raising the issue of Canadian drug importation. Kerry's demand for drug importation smacked of opportunism at a time when the savings seniors get from the Medicare drug card - not counting the $2 billion in free drugs available from pharmaceutical companies - is nearly as much as the entire Canadian prescription drug market. The fiction that Canada could supply America's seniors with a cornucopia of cheap drugs was always a hairsbreadth away from collapsing, and now that Canada's health minister has flat-out said that his country won't be America's drugstore, you would think that this fantasy will finally be put to rest.

Think again. Importation supporters want to force pharmaceutical and biotech companies to make and sell their products overseas in unlimited quantities for importation back into the U.S. at fixed prices. If Canada won't be our drugstore, maybe Europe, Asia, and the Middle East will.

This is a ridiculous program at a time when America needs to spend more time and effort developing the next generation of medicines based on human genetics - medicines that are enormously productive for the American economy and patient health. Rather than continuing on the path of making the U.S. the global leader in the pharmaceutical and biotech sectors, members of Congress - including some members of your own party - want the U.S. to abdicate its leadership in order to gain cheap access to less innovative medicines produced from our competitors in France, Germany, India or Israel.

By forcing companies to sell unlimited quantities of their products in price controlled markets for importation back into the U.S., these politicians will cripple the industry's ability to turn profits into innovative new medicines. Medical progress will be forced to a crawl.

There might be some justification for this if importation would offer U.S. consumers significant savings. But it doesn't. The Congressional Budget Office estimates that it will save American consumers less than one percent on total drug costs a year. In Europe (where drug importation is called parallel importation) the savings have been miniscule.

Just ask Tony Blair about the "value" of importation for the U.K.'s bottom line. Two different studies have found that it saved his country's health system less than one percent of its total drug spending; worse yet, parallel importation drains the U.K. pharmaceutical industry of about $1.5 billion in profits a year. The reality is that parallel importation and drug price controls have sent European pharmaceutical companies to the U.S. to remain profitable. It is no coincidence that GlaxoSmithKline, the largest British drug company, conducts most of its research and markets most of its new products first in America.

That's called outsourcing Mr. President. And just as European parallel importation and price controls outsourced Europe's pharmaceutical and biotech industry to the U.S., imposing price controls on the U.S. market through drug importation - or any other mechanism - will send that investment (and the high paying, high tech jobs it creates) scurrying out of the U.S. just as fast.

Your choice is simple, but not easy. Veto any legislation that hits your desk that does not make America's pharmaceutical and biotech sectors more competitive. Appoint leadership at the FDA that understands that regulation should be sensible, streamlined, and driven by the best and most current science available - not by demagoguery produced by groups like Public Citizen and its trial lawyer allies. Continue to defend and improve the Medicare drug benefit enacted by Congress.

And, last but far from least, reach out to the American people and remind them that medical progress is driven by risk taking, innovation, and a commitment to market incentives - the same forces that have made America the world's economic powerhouse.

These initiatives will make medicines affordable without outsourcing American jobs or investment capital, and without denying today's cancer, AIDS, and Alzheimer's patients access to tomorrow's revolutionary new treatments.

Mr. President, you have already done much to help Americans gain access to the best health care in the world without caving in to the critics of capitalism and medical innovation. All that is left to do now is, as President Reagan would say, to stay the course.

Robert Goldberg, Ph.D., is Director of the Center for Medical Progress at the Manhattan Institute.

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