Limited Personal Importation by the Uninsured Makes Sense
By Roger Bate
Starting Monday, Google will prevent web pharmacies dispensing drugs from abroad from advertising on its search engine. Google claims this move will lower the risk of people buying counterfeit drugs, and Western drug makers agree. But it’s bad news for patients who struggle to pay U.S. prices for drugs. What’s more, it won’t noticeably improve drug quality.
Google’s new policy means fewer than 20 web pharmacies can advertise online. Many are brand-name organizations like Walgreens, CVS, and Rite Aid, companies that built an online presence as their bricks-and-mortar operations lost some business to small U.S. and Canadian web-based outfits. Most of those competitors are not on Google’s new list, yet many of them sell good-quality drugs.
A lot of web pharmacies, of course, do not. Thousands of people, mostly in poor nations, die every year as a result of counterfeited drugs, and the web is unfortunately a major source of bad drugs for westerners. Many web sellers also market drugs inappropriately to patients without prescriptions. According to the U.S. National Association of the Boards of Pharmacy, which licenses U.S. pharmacies, 96 percent of the more than 5,000 websites it examined do not comply with good standards. And the World Health Organization says more than half the drugs bought from web pharmacies with unknown physical locations are fake. When my research team bought from some allegedly “Canadian” websites, we were sent fake Viagra, which was shipped from China and probably produced there.
But we went looking for trouble, and it was easy to find. It is not, however, difficult to stay relatively safe when buying medicines online. There are dozens of licensed pharmacies selling good-quality drugs from around the world. They have been investigated and monitored by the independent company Pharmacychecker.com since 2003. My team tested drugs from more than 20 Pharmacychecker.com-approved sites, all good-quality licensed pharmacies registered in Canada or other countries, and all passed quality tests, whether the drugs came from Australia, Canada, or five European nations.
Until March 1, Google was using PharmacyChecker.com as its guide for sites that could advertise. By allowing those sites to promote themselves through Google, uninsured Americans determined to buy cheaper foreign drugs could better protect themselves from buying counterfeit drugs.
Why, then, has Google changed its tune? Technically, it is illegal for a U.S. citizen to import drugs from an overseas pharmacy. But if the supply is for personal use and for 90 days or less, the Food and Drug Administration (FDA) has never prosecuted anyone for doing so. FDA even has an information page about the practice on its website. And why change policy now? It’s not as if the law has just made drug importation illegal.
Manufacturers do have an economic case for preventing foreign drug importation; segmenting drug markets based on income levels is fair and efficient. Pharmaceutical companies cannot charge efficient prices in most world markets. The result is that U.S. citizens pay the highest average drug prices in the world—effectively subsidizing everyone else’s medication. The pharma industry wants to maintain these higher prices and so plays up the dangers of foreign imports.
But this is overwhelmingly scaremongering that ends up disproportionately hurting the poor. Thousands cannot afford their drugs, and so the poor and uninsured have found a workaround: web entities that can directly access the lower prices being charged abroad. A Deloitte survey found that 4 percent of U.S. prescription drug users bought drugs from overseas last year.
Making criminals of those hundreds of thousands of individuals is silly, and their actions should be decriminalized. That said, the status quo where insurers do not cover foreign imports for the majority should remain. Otherwise we would import price controls and undermine company profits and hence research budgets for new products we will need.
So while preventing wholesale drug importation makes economic sense and is also broadly equitable, allowing limited personal importation of products by the uninsured would further equitable market segmentation.
Fake drugs proliferate on the web, but one can find safe options without being limited to buy from billion-dollar U.S. brand-name pharmacies.