The Washington Post ran a column by Leona Aglukkaq, a former member of Canada's House of Commons and Canadian health minister, which complained that Senator Bernie Sanders proposal to allow mass importation of drugs from Canada would overburden the country's regulatory agency. As the piece tells readers:
"Canadian authorities do not inspect every shipment of products headed for the U.S. marketplace to ensure that packages don’t contain adulterated, counterfeit or illegal drugs. Canada does not have the resources to undertake such comprehensive searches, and the Canadian and U.S. governments are not currently set up to facilitate such a program. Canada’s health-inspection regime is designed to ensure the safety of medications for Canadians, not for other countries."
While this is undoubtedly true, there is a little secret that fans of economics and logic have long known. With additional money, Canada could expand the size of its regulatory agency so it would have the resources to undertake such comprehensive searches.
And, where might Canada get the additional money? It can tax the drugs being sold to people in the United States. With the price of drugs in the United States often two or three times the price of drugs in Canada, there is plenty of room to impose a tax to cover the additional inspection costs and still leave massive savings for people in the United States.
The entire Food and Drug Administration budget for medical product safety last year was $2.7 billion. We will spend over $440 billion on prescription drugs in 2017. A small tax on whatever passes through Canada should easily cover the cost of inspections and, in fact, could cover the cost for Canada as well. This is a classic win-win through trade under which everyone can benefit.
Of course, Ms. Aglukkaq is correct that this is not a good solution to the problem of making drugs affordable in the U.S. We should be looking for alternatives to supporting research through government granted patent monopolies, as Senator Sanders has been doing. Along with Sherrod Brown and 15 other Democratic senators, Sanders has proposed money for a prize fund which would buy up the patents for approved drugs and put them in the public domain so that they could be sold at their free market price.
The bill also proposes that the government pay for the clinical testing of new drugs. The test results would be in the public domain, which would enormously benefit researchers and doctors when deciding which drugs to prescribe. And, the approved drug would also be available at free market prices.
The big problem is that, while drugs are cheap, patent monopolies make them expensive. Unfortunately, the Washington Post doesn't like people pointing things like this out on its opinion page. (It is probably worth mentioning that the Post gets large amounts of advertising revenue from drug companies.)