by Doug Bandow
Institute for Policy Innovation
August 13, 2004
With the approval of Medicare drug benefit legislation last fall, public attention has shifted to reimportation of pharmaceuticals from foreign nations. Although some reimportation advocates are attempting to sell the practice as a simple matter of free trade, most supporters have a different agenda: they are pushing reimportation because it would effectively impose foreign price controls on the U.S.market. Foreign governments have created artificial markets to take advantage of U.S. patients by free-riding on American R&D. Despite this, U.S. support for reimportation is now reaching from individuals to governments. Genuine competition presumes the freedom to set and adjust prices. But the “competition” advanced by reimportation is competition against oneself. Thus, attempts at price arbitrage based on lower prices abroad effectively means applying foreign price controls at home.