PHARMACEUTICALS Drug imports offer little savings, study suggests

The U.S. surgeon general weighed in on the issue.
CBS MARKETWATCH
WASHINGTON -- Drug reimportation won't save much money overall and might hinder incentives for companies to develop new drugs, according to a government report issued Tuesday.
The report, commissioned by the U.S. Department of Health and Human Services, indicated the benefits of allowing wholesalers and pharmacies to import cheaper drugs from Canada and other countries don't outweigh the risks involved, and the extra costs in overseeing pharmaceutical traffic.
"The results of the task force report should reinforce President Bush's opposition to drug importation, as well as the Republican leadership's position on the issue in Congress," said Greg Kelly, a Washington affairs analyst for Susquehanna Financial Group.
A 13-member task force examining the issue said a large, commercial system could make drug reimportation safe and feasible, but it would cost hundreds of millions of dollars to set up and maintain.
Yet against that backdrop, the group estimated that U.S. consumers would save only about 1 percent on overall drug costs.
While the report's conclusion may burst the bubble of consumers, who are counting on the new policy as the floodgate to more affordable drugs, it's a positive for drug companies, particularly makers of brand products, market analysts say.
"Ultimately, it will make it more difficult for supporters of importation to move their argument through Congress," Kelly said.
Maintaining standards
The task force, which released its findings Tuesday, said only drug imports from countries that have the same standards as the United States should be allowed.
But the only nation that currently qualifies under that standard is Canada, task force members said.
If Congress considers a law allowing the reimportation of drugs from Canada, it must be one that provides a so-called "closed" distribution system with tight regulations governing all points along the distribution chain, including drug storage and transport, said U.S. Surgeon General Richard Carmona, chairman of the task force.
Such regulations must be on par with those of the U.S. Food and Drug Administration, he said.