# 476  

July 2003




Dying for a Discount: The Dangers in Importing Drugs

 

by Edmund F. Haislmaier

 

Sometimes bad ideas don't die. Like creatures in a scary movie, they keep coming back.

In 2001, legislation to ease importation of cheaper drugs from abroad was the hot idea in health policy circles. Then came September 11, followed by anthrax, leading a health policy expert to comment that easing drug importation was "one issue we won't have to deal with anymore."

Wrong. It's baaaack!

To some, the greatest act of terrorism in history followed by deaths from the malicious mailing of a bio-weapon suggests it's time to be more, not less, vigilant about the safety of America's drug supply. But others seem to be dying - pardon the pun - to get their hands on cheaper drugs.

This issue exists because prescription drugs are often cheaper in other countries, and some Americans want to take advantage of those lower prices.

However, loosening controls on the importation of pharmaceuticals is a bad idea. An even bigger problem than terrorism - so far - is the growing number of attempts by common criminals to make a fast buck from fake drugs - regardless of who is harmed.

This already is a significant problem with domestic crooks. Easing import restrictions would encourage them to move offshore, out of reach of our law enforcement, while increasing our vulnerability to foreign criminals.

Recently, FDA officials testified to Congress that, since 1996, their agency has opened 73 counterfeit drug cases resulting, to date, in 44 arrests and 27 convictions.1

Last month, three California men pleaded guilty to charges of selling and wholesale distribution of fake Procrit, an anti-anemia drug. The perpetrators of the fraud were passing off vials that "contained only bacteria-tainted water" to unsuspecting pharmacists and patients.

Other recent cases involved criminals selling fake versions of Lipitor (a cholesterol lowering drug) and Serostim (a growth hormone often used to treat AIDS wasting); passing off sterile water as Neupogen (a drug used to treat cancer patients) and aspirin as Zyprexa (a drug for schizophrenia) and selling tampered vials of Epogen diluted to 1/20th strength (like Procrit, Epogen is used to stimulate red blood cell production in cancer and AIDS patients).

In the Epogen case, an FDA official noted that, unwittingly, "a major wholesale distributor was holding approximately 1,600 cartons of counterfeit product," while the Florida health inspector on the case reported "25,000 patients received a one-month supply of diluted drugs."2

The problem is much worse overseas. Counterfeit drug sales are rampant in many Third World countries. Also, both at home and abroad, organized crime is getting into the act. It has discovered that the profits from faking legal drugs are as big as those from selling illegal drugs, while detection by the authorities is less likely and the penalties, if caught, are much lighter.3 In any country, conviction for selling fake pharmaceuticals will get you a fine and maybe some jail time, while in some countries trafficking in heroin carries the death penalty.

Advocates of easier drug importing argue that new tamper-resistant technologies and tracking systems will keep the crooks at bay. But, given the lengths and sophistication some criminals go to in producing counterfeit money, there's no reason to think they won't also buy, steal or fake whatever is needed to make the packaging of fake drugs also look real. And that is without a hostile government getting into the act, as has often been the case with currency counterfeiting.

However, the real issue isn't even pills. America doesn't have a drug shortage. What proponents of drug re-importation really want to import is other countries' prices for those pills. Importing the physical product is just a back-door way to do that.

There are two reasons drugs are cheaper elsewhere. In the Third World, it's because drug manufacturers charge lower prices so people in those countries can afford to purchase drugs. Essentially, it's an act of charity. In the developed world, it's mainly because other, more socialist, countries impose some form of price control on drugs.

Let's have an honest debate about the real issue. Rather than push legislation to relax drug importation rules, re-importation advocates should instead put a U.S. drug price control proposal on the table. Then we can openly debate the trade-offs between cheaper drugs for consumers and the necessary incentives for drug makers to develop new treatments. We might even discuss trade penalties on countries that use price controls to buy American pharmaceutical R&D at a discount.

It would be a more honest debate, and at least then we won't be gambling on the quality and safety of the drugs Americans rely upon.

# # #

Edmund F. Haislmaier is a member of the board of directors of The National Center for Public Policy Research.


Footnotes:

1 William K. Hubbard, Associate Commissioner for Policy and Planning, U.S. Food and Drug Administration, testimony before the U.S. House of Representatives Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, June 24, 2003. The testimony can be found at http://energycommerce.house.gov/108/Hearings/06242003hearing982/Hubbard1555.htm as of July 18, 2003.

2 Dr. Cesar Arias, R.Ph., Drug Inspector Supervisor, Florida Department of Health, Bureau of Statewide Pharmaceutical Services, before the U.S. House of Representatives Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, June 24, 2003. The testimony can be found at http://energycommerce.house.gov/108/Hearings/06242003hearing982/Arias1560.htm as of July 18, 2003.

3 Peter S. Goodman, "China's Killer Headache: Fake Pharmaceuticals," The Washington Post, August 30, 2002, p. A01.



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