Big pharma throws its weight around in trade negotiations

The pharmaceutical industry is using a variety of tactics to stem the flow of lower priced drugs from Canada and elsewhere into the US. The industry has devised and deployed some clever tools, including PR campaigns designed to scare the public into avoiding foreign drugs and restricting supplies to countries and companies that export too much. It’s tough to make these tactics work well in practice, because the economic incentives for reimportation are too great.

But pharma is also going after the root cause of the problem, which is the tendency of foreign governments to regulate the price of drugs. According to the Center for Public Integrity, the pharmaceutical trade association PhRMA has had more reportable contacts in the past few years with the Office of the US Trade Representative, which negotiates foreign trade agreements, than it has with the FDA.

PhRMA’s efforts are starting to pay off, with the recently announced Central American Free Trade Agreement (CAFTA) largely incorporating the pharmaceutical industry’s agenda. But as PhRMA has seen elsewhere, these sorts of efforts often inspire a strong backlash.

July 7, 2005

One thought on “Big pharma throws its weight around in trade negotiations”

  1. Pharma is scared of drug reimportation, but the consumer shouldn’t be too excited. It’s important to note that quoted price differences are off of the “retail” price in the U.S that almost no one pays, especailly with medicare in the act in 2006 (most consumers have small copays, while the big payors like PBMs, MCOs and the govt get big disocunt and rebates), the real difference is much smaller (but still significant). Also, Canada’s market is only 5% the size of the U.S., and can’t handle a major program effectively to dent our market. Pharma’s reaction would likley be to negotiate harder for higher prices or restrict supply in countries importing to the U.S. Also, studies in other markets show that most or all of the potential savings of reimportation are siphoned off in the distribution system (“value chain”). And, of course, I’m not even touching on the debate around the long-term impact on R&D spending. I’m all for shaking up pharma, but I doubt reimportation solves any problems. How about consumers and docs choosing generics more often?

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