by
Cato Institute
August 19, 2004
Policy Analysis
As modern "miracle drugs" play a growing role in medical practice, drug prices in America soar far beyond prices in the rest of the world. Yet our law prohibits Americans from buying American-made drugs abroad at those prices and "reimporting" them to the United States. That has led many Americans, and even some state and local officials, to ignore the law and go to Canada and Mexico for their drugs. As a practical matter, however, Americans end up paying for most of the costs of drug R&D while the rest of the world rides free -- and that is politically unsustainable, as events are demonstrating. The current ban should be lifted, therefore, not to encourage reimportation, but to allow the incentives to surface that will "force" wider use of market practices and the international trade regimes that reflect such practices.



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