Clinton, GOP Endorse Import of Cheaper Drugs

Reaching across party lines, President Clinton and Republican leaders have tentatively agreed on legislation that could open the way for consumers to buy imported prescription drugs that are cheaper than drugs now sold in the United States.

The legislation would permit pharmacists and wholesalers to import prescription drugs that were originally manufactured in the United States for sale overseas at discounted prices. Because many other countries sell prescription drugs at a fraction of American prices, a portion of any savings would probably be passed along to consumers when the drugs are brought back to the U.S.

The measure would require that any drugs “re-imported” into the country be certified by the Food and Drug Administration to ensure they were not counterfeit and are still potent.

Although lawmakers are still haggling over details, both Clinton and GOP leaders have endorsed the core concept of the bill despite enormous opposition from drug company officials who fear any legislation that supports price controls. Pharmaceutical products are often much cheaper in other countries because many foreign governments control prices to keep drugs affordable for consumers.

The driving force behind the surprise agreement on Capitol Hill is an outcry from consumers over both the high price of many prescription drugs and the lack of adequate medical coverage for seniors. In an election year, it has been hard for lawmakers to resist campaigning on the issue, and several politicians in border states have gone so far as to organize well-publicized bus trips in which scores of seniors are ferried to Canada to buy drugs at the lower prices mandated by the Canadian government.

“I think it’s wrong when drug companies sell the same drugs for a much higher price at home than they do overseas, even when those drugs are manufactured right here in America,” Clinton said Tuesday.

“It’s one thing we can do,” House Majority Leader Dick Armey (R-Texas) said.

Whether the bill would have much real-world effect, however, will depend on its final form. Stock analysts also warned that it could turn out to be economically unfeasible for the large wholesalers and pharmacies to re-import a sufficiently large volume of drugs to make a difference in consumer prices.

Wholesalers typically get rebates from the pharmaceutical manufacturers for handling their drugs. But if they decided to buy overseas, they might be forced to choose between giving up the rebate and taking advantage of the overseas discount, said Mara Goldstein, a drug company analyst at CIBC World Markets.

“The purpose of the bill is to bring consumers lower drug prices, but the reality is that they never could see the lower prices,” Goldstein said.

Stock analysts also warned that because the legislation sets no limits on what wholesalers could charge, they could price them just below what the drugs would otherwise cost on the U.S. market, passing only the most marginal savings to consumers.

It is most likely that there could be lower prices in border states where smaller wholesalers and independent pharmacies would be more likely to take advantage of the nearby cost-controlled market, Goldstein said.

The legislation would have no impact on the larger drug issue facing the country: how to provide prescription drug coverage to the 40 million elderly and disabled Americans in Medicare.

But Congress and Clinton are deadlocked on that legislation as they are on most major health legislation this year.

Prescription drug manufacturers say the drug import measure could put patients at risk because it would be difficult for the FDA to monitor all the medicines being brought back into the country.

The drug companies would prefer to see an overhaul of the Medicare program that would give more money to private insurers and HMOs to offer prescription drug coverage.