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US parallel trade to be legalised after Republican U-turn

Published on 29/06/04 at 02:22pm

Re-importation of cheaper medicines from Canada and other countries into the US looks certain to be legalised after the Bush administration signalled it would not oppose new legislation.

In May, health and human services secretary Tommy Thompson indicated that he would advise the President not to block new legislation.  "I think it's coming," he said. "I think Congress is going to pass it."

Reforms to the country's health insurance system Medicare, now being introduced, give assistance to 'seniors' in paying for prescription medicines for the first time ever, but Canadian prices remain 40% below those in the US, fuelling the cross-border trade, made possible by loopholes in the current law.

Three rival bills have now been tabled to legalise the trade, all going further than the limited provision for imports contained in last year's Medicare reforms, and each one with some backing from members of President Bush's own Republican Party.

The Dorgan-Snowe bill is the only one to have attracted support from both Democrats and Republicans, and would require wholesalers and pharmacies importing drugs to register with the FDA and pay fees of up to 1% of the value of the medicines imported.

Pharma companies oppose the trade which undermines their profits and highlights the high price of medicines in the US market, which accounts for over half of all the industry revenues. Companies say the uncontrolled trade is dangerous, potentially exposing US citizens to unsafe or counterfeit medicines, a stance mirrored by the FDA, which has succeeded in closing down a number of cross-border traders.

Each of the rival bills has proposed a system for regulating and legitimising the trade to guarantee safety standards while still benefiting from cheaper prices.

Two of the bills also propose to stop the current practice of pharma companies restricting supplies in Canada to limit re-importation - tough measures on an industry increasingly unpopular with the electorate.

Commenting on the Gregg bill, Alan Homer, president and chief executive of industry trade organisation PhRMA, said: "The evidence is clear that importation will open our borders to counterfeiters and unscrupulous individuals, putting patient health and safety at risk from fake and unsafe drugs.

"This additional risk would not be offset by the expected benefit to American consumers of cheaper drug prices."

All three bills also propose to allow imports from other countries, once trade with Canada has been shown to be safe and reliable.

The small size of the Canadian market means it could only supply a fraction of the US with cheaper drugs, leading the authors of each bill to propose importing from the EU - a nightmare scenario for the industry, who rely on US prices to maintain the growth of their businesses.

But the assumption that the industry will suffer if re-importation is legalised has been challenged in a study by the Health Reform Programme at Boston University's School of Public Health.

Directors Alan Sager and Deborah Socolar concluded that the actual financial harm may be "surprisingly low", with the lost revenue being offset by new prescriptions in Canada for US citizens which would otherwise never have been written.

"If the new prescriptions' share of imports is 45% or more, importing actually increases drug makers' profits," they concluded.

The Dorgan-Snowe bill has the backing of the influential AARP, a non-profit organisation representing the interests of some 36 million US citizens aged 50 and over.

AARP chief executive William Novelli said: "It is no longer a question of whether we should allow the importation of drugs from abroad. It's already happening.

"We need to legalise this and, above all, make sure that a system is in place to guarantee safety. And that's what the Dorgan-Snowe bill does."

As the November date for the US Presidential elections approaches, this issue and the wider healthcare debate is set to be one of the key battlegrounds. President Bush and Democrat candidate John Kerry have already outlined their plans for extending healthcare insurance and show stark differences.

President Bush's plan would cost around $90 billion over 10 years and would extend health coverage to 2.1 million citizens, while Kerry's would cost $653 billion over the same period and expand coverage to more than 26 million people.

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