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Politics : Impeach George W. Bush -- Ignore unavailable to you. Want to Upgrade?

To: JBTFD who wrote (81004)	5/30/2007 5:41:35 PM
From: TimF	Read Replies (2) \| Respond to of 93284

Are Canadian drug prices really about freedom? No, they are controlled by the government. If low numbers of Americans buy drugs from Canada, it probably does benefit them, without causing measurable harm to anyone else, at least not the type of harm that I have any serious concern about. If OTOH a very large number of Americans buy drugs from Canada there will be severe problems in one form or another. One likely result is an increase in the price of drugs in Canada. You would after all have increased demand for the drugs in Canada. Normally that increased demand would increase the price, bringing supply and demand back in balance. If the price is fixed you may get shortages. Right now the American drug companies sell their drugs to Canada even at the low price set by law, because they do make an incremental profit by doing so. The direct manufacturing and distribution costs for each pill are lower than the cost they can sell the drug for in Canada. But the overhead (R&D, promotion, etc.) gets covered by the higher priced sales in the US. If Americans all start buying from Canada there is no higher price sales, so the drug companies might refuse to send Canada enough to cover the American demand at Canadian prices. If they had to they would even lose the Canadian market (which is after all much smaller, and less lucrative then the American market), rather then give up their margins in the US. But maybe this doesn't happen. Maybe the drug companies get politically pressured in to sending Canada unlimited amounts of drugs, either because Americans who want the drugs at lower prices get the US government to go after the drug companies, or because the Canadian government tells the Americans if they don't send the drugs, they will allow Canadian companies to produce them (perhaps even for export outside North America), even if they are still under patent. Or perhaps something else causes the Americans to send Canada over 10 times as much drugs as it needs. I don't think it will happen. but what if it does? What happens then? Well in the short run, the net effect might be beneficial. Certainly the drug companies would be hurt, but an argument can be made that the cheaper drugs more than make up for it. If I ignore issues of principle, then I would probably even agree with this argument. But people respond to incentives, and that includes the people who invest in and run large drug companies. Lower prices, mean lower current, and more importantly lower expected return on investment. Lower expected return on investment means you get less investment. Drug companies aren't going to pay the huge cost of developing, testing and approving new drugs to anywhere near the extent they do now. So improvement in drug therapies slow down, probably by a lot.