Reimportation: A First Step or False Step Toward Transparency in the Prescription Drug Market?
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CitationReimportation: A First Step or False Step Toward Transparency in the Prescription Drug Market? (2005 Third Year Paper)
AbstractDrug reimportation has become a politically-appealing way to lower drug prices, which Americans commonly perceive as too high. However, legalizing reimportation of U.S.-approved drugs raises major concerns about safety and future research and development. The FDA task forces on reimportation and on preventing counterfeit drugs provide a list of complicated measures that could address the safety question for a commercial reimportation scheme. Moreover, by their support of reimportation, members of Congress have implicitly demonstrated a willingness to forego a small amount of future innovation in return for increasing current access. Nevertheless, reimportation does not fully meet the twin challenges of reforming American drug consumption: increasing price transparency and comparative research on drug effectiveness, which I call scientific or medical transparency. These dual transparencies reward manufacturers with more innovative products by paying them higher prices for their drugs. Transparency also helps drug purchasers to maximize their negotiating power, allowing them to buy drugs of equivalent therapeutic value at lower prices. By contrast, reimportation does nothing to increase medical transparency, it requires significant start-up costs, and its effectiveness may be limited because drug companies will try to choke off the available supply of drugs. Therefore, while reimportation may relieve the burden of high drug prices for many Americansâ€”and while it represents a small step toward open price competition between drugsâ€”it is an acceptable strategy only in the absence of the political will to inject much-needed transparency into the $150 billion American drug market.
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