Forced Pharmaceutical Sales and The End of Sovereignty

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  • 09/19/2005

Every potential government action yields a reaction, and nowhere is that eternal truth clearer than in the ongoing debate over the importation of pharmaceuticals subject to foreign price controls. Such legalized importation would be one way for those favoring price controls on pharmaceuticals—a blatant wealth transfer from the future to the present—to have that cake without actually having to vote for it, and thus having to bear responsibility for the ensuing adverse effects on future human suffering.

In any event, all the importation talk some months ago led the authorities and others in Canada and elsewhere to make it clear that they could not be viewed as America’s pharmacy; the Canadian market simply is too small to supply America’s pharmaceutical demands even at current prices. And the pharmaceutical producers themselves, like all good capitalists attempting to do well by doing good, would have incentives to limit sales into the various foreign markets, so that foreign governments in effect would not take on the role of determining pharmaceutical prices in the U.S.

And so we have yet another example of government grasping ever-more power so as to circumvent the problems created by previous (or other proposed) power grabs: Current proposals to allow the importation of pharmaceuticals subject to foreign price controls include provisions forcing the producers to sell to the foreign governments all the drugs demanded at the controlled prices, thus transforming the foreign markets into the central middleman suppliers for the U.S. market.

Where to begin? This means that foreign governments—or more specifically, the foreign governments imposing the tightest price constraints—will be given the power to set prices in the U.S. Do we want the future of U.S. medical technology to be determined by political pressures overseas and/or by bureaucrats in Ottawa or Brussels or elsewhere? Apparently, some in the U.S. Congress do indeed. And precisely what is the economic value of any given pharmaceutical patent when that economic value in the U.S. can be confiscated by foreign politicians, whether elected democratically or not? So much for the future of pharmaceutical investment and innovation—the research and development process takes over a decade, and what investor wants to bet on political outcomes not only in the U.S., but anywhere in the world?— and thus for the future development of cures.

And let us have no nonsense about the importation of pharmaceuticals subject to price controls as a manifestation of “free trade.” Forced sales at controlled prices—prices not approved even by We the People, that is, Congress—are no more consistent with the principles of free trade than the purchase of stolen merchandise from the back of a truck would be consistent with the principles of free enterprise. Thus is the forced sales approach a blatant violation of the Takings Clause of the 5th Amendment, as the price controls would transfer the property rights (i.e., real wealth) inherent in patents from pharmaceutical producers and future patients to current interest groups without any compensation whatever, whether just or not.

The last time I read the 13th Amendment to the Constitution, it said something rather sharply unfavorable about involuntary servitude. The forced sales proposals would mandate that pharmaceutical producers sell all that is demanded at the prices dictated overseas, without recourse to the ordinary processes of negotiation, let alone legal institutions. Thus would American firms be forced to serve foreign masters—literally—on terms dictated by foreigners. And let us not forget the “nondiscrimination” dimension of the forced sales gambit: If the German government buys, say, 30 million doses of a drug at a given price, would the pharmaceutical firm be forced to sell an identical quantity at the same price to anyone in Germany? That the answer is not clear—it might very well be “Yes”—reveals a good deal more about the forced sales idea than its proponents would like us to know.

And is there any reason to believe that such forced sales would be limited to drugs? If U.S. politicians can transfer wealth to their constituencies in the form of “cheap” pharmaceuticals, why not a myriad of other goods that require massive up-front investments?

So there we have it. Fewer medicines. U.S. markets held hostage to foreign political pressures. A wholesale destruction of the Bill of Rights. Government of, by, and for the People—Sovereignty—cast to the winds. Such are the inexorable outcomes yielded by politicians and bureaucrats in hot pursuit of wealth redistribution, the larger adverse implications be damned.

CMPI

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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