The Great American Drug Cartel

In response to pressure from President Bush, Canadian officials are getting set to announce restrictions on internet drug sales to U.S. customers. Those who watched the presidential debates last fall will remember that the topic of cheaper Canadian drugs being imported by U.S. citizens was briefly discussed. President Bush's stance during the debates was "We'll let them in, as soon as we know they're safe." Anyone who is familiar with the pharmecuetical industry and the FDA knows this is completely bogus.

The U.S. government has no intention of allowing prescription drugs to cross the border freely, at least not without a significant hike in price. The real issue behind the drug question is not safety. Canadian drug standards are at least as high as those in the U.S. if not more so. When was the last time you heard of a Canadian dropping dead because his prescription wasn't approved by the FDA. The real issue is protectionism.

The pharmaceutical industry constitutes one of the largest and most powerful lobbies in the country. What their lobbying, campaign contributions and resulting political influence has achieved is a government grant of immunity from foreign competition. This is of course performed under the guise of consumer safety so as not to arouse the public's ire. In fact, the entire health care industry is highly regulated and protected to keep out competition and keep supply low in order to prop up prices above normal market levels. This means higher salaries for health care professionals and bigger bottom lines for domestic drug companies.

What it also means is steadily rising health care costs that have become unbearable for many Americans. Those without insurance are finding it near impossible to pay for even the most basic services. Buying cheaper medicine over the internet or across the border is a way for some people to greatly reduce their health care costs and for others, may allow them to obtain drugs they otherwise couldn't afford. Now thanks to our friends in Washington this door may soon be closed, though it remains to be seen how enforceable these restrictions will be as internet transactions are notoriously difficult to regulate and control.

Just in case you were wondering, these are not cases of American dope addicts just buying hard drugs that they don't have prescriptions for. The vast majority of these transactions take place with Canadian doctors examing the medical history of online buyers, and using prescriptions written out by American doctors. The only difference is where the drugs come from and the price paid for them.

This would be a great place to present an elementary lesson on the adverse effects of government intervention in the market place but I'll spare you the bore. If you're interested in that kind of thing, Henry Hazlitt's "Economics in One Lesson" is a fantastic introduction. Basically what we have here is a classic case of intervention begetting more intervention. Out of control costs will undoubtedly result in price controls. Price controls however, always fail in achieving their original goals and must be accompanied by even more regulation, control and even worse, rationing.

This road leads inevitably to socialized medicine. Since Americans can't afford health care or health insurance on their own, and American businesses are becoming bogged down with employee benefit costs, we will see increasingly louder calls for the government to step in and provide insurance for everyone. For those not familiar with the effects of socialism on the supply and quality of goods and services (although I don't know how that's possible given the abundance of available evidence) this will mean shortages, and services of increasingly questionable quality.

This is not the path we want to take. The real solution to this problem is a free market in health care and medicine, and that includes international competitors. You would think that as a nation, we would have learned by now that economic isolation, protectionism, and socialism only make us poorer and less free.