Thursday, July 18, 2002

American Prospect's blog and the Star Tribune via Instapundit discuss the fact that the US Senate has passed a law allowing Americans to buy prescription drugs imported from Canada, where they are cheaper. However, the Bush administration will not carry out this plan

because it would endanger public health.... Opponents argue that such drugs could be tampered with, thus posing serious health risks. Senators added a provision to the bill that requires the secretary of health and human services (HHS) to certify that drug re-importation poses "no additional risk to the public's health and safety" and will result in a "significant reduction" in cost U.S. consumers.

Arguing that imported products are of lower quality or do not satisfy local safety regulations or something like that and therefore should not be allowed is of course one of the oldest tricks in the "I'm not a protectionist but..." book of tricks. But what is curious is how similar these "Opponents of..." sound just like politicians who have been bought by the music industry in my native Australia. Several years ago the Australian government passed a law making parallel imports of CDs legal: it is fine for people to buy CDs legally in any foreign country, import them into Australia, and then resell them. Previously only importers authorised by the copyright holder could do this. The record companies just hate this, and their cosy monopoly profits have been eroded. Rather than attempt to defend their distribution monopoly directly, their principal tactic in opposing this has been to insist that it will lead to enormous numbers of pirate CDs being imported into the country.

As far as prescription drugs are concerned, I do not know why the drugs companies, who I really have very little against, want to copy the tactics of organisations as morally bankrupt as the record companies. There actually are serious issues at stake here. If you have countries with radically different intellectual property laws, then it may be justified in prohibiting parallel imports from them. In the case of drugs, countries in the third world are going to be declaring emergencies and manufacturing drugs cheaply under compulsory licenses. It isn't appropriate to allow parallel imports of these drugs into the developed world. However, there is no good justification at all for banning parallel imports from Canada, Japan or Germany. If the drug companies try to do this and so manage to weaken their moral position, they are going to find it much harder to walk the tightrope they need to with respect to Brazil, South Africa and India.

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