Healthy Skepticism Library item: 11114

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Orelli B.
Cheap Drugs on the Farm
The Motley Fool 2007 Aug 6
http://www.fool.com/investing/value/2007/08/06/cheap-drugs-on-the-farm.aspx

Full text:

Michael Moore may be one step closer to his goal of cheaper health care.

Last week, the House of Representatives attached an amendment to a farm appropriations bill that would allow individuals, wholesalers, and pharmacists to import FDA-approved drugs from countries where drugs are cheaper, such as Canada, Australia, and members of the European Union. Current law allows consumers to import a 90-day supply for their own use, but this would expand the practice considerably.

President Bush strongly objects to the provision in the bill, supposedly because the FDA would have a tough time protecting consumers from counterfeit drugs. In reality, I think he’s just keeping drugmakers’ interests in mind. Drug sales at reduced prices will cut into pharmaceutical and biotech companies’ bottom lines substantially.

Companies that make drugs taken for chronic conditions will be hurt most by the new legislation, since those patients are most likely to invest the time in shopping around for price. I’m thinking about blockbuster drugs such as GlaxoSmithKline’s ADVAIR for asthma; Pfizer’s cholesterol pill, Lipitor; Plavix, the blood thinner from Bristol-Myers Squibb and Sanofi-Aventis; and AstraZeneca’s heartburn pill, Nexium.

Generic drugmakers such as Teva Pharmaceuticals (Nasdaq: TEVA) and Mylan Laboratories (NYSE: MYL) aren’t likely to be hit nearly as hard. Because of strong competition, generic drugs in the U.S. are often priced lower than in other countries.

I’m all for cheaper health care, but the problem with this type of legislation is that it directly hurts the drugmakers’ pocketbooks. Drugmakers don’t offer drugs at a discount in other countries because it’s cheaper to sell them there; they sell them at a discount because the governments require them to. Someone has to pay for all the research and development that goes into developing new drugs — as well as all the drugs that fail in the laboratory and in clinical trials. It’s unfortunate that people living in the U.S. have been given that role, but our financial support has funded the development of some very effective drugs in the last 20 years.

The provision is still far from becoming a law. It will need to survive the conference committee with the Senate, where Republican lawmakers have ripped out previous attempts by the House to insert similar legislation. It’s not clear if President Bush would veto the bill just because of the provision, but he doesn’t appear to like the bloated farm bill that it’s attached to, so the provision could die on his desk as well. Fools should keep an eye on the status of the bill, because laws that hurt the drugmakers’ bottom lines will hurt their stock prices as well.