On the question of whether Congress should lift the current ban on the free importation of pharmaceuticals from foreign nations, including those nations that control pharmaceutical prices, we have often disagreed. One of us (Pilon) thinks that lifting the ban would force a change in current practices and would better enable the market to sort out the competing interests at stake in the matter.[1] The other (Calfee) worries that the political fallout from free importation could bolster support for U.S. price controls and their untoward effects.[2]

However, we agree entirely on the essentials. In particular, we agree that if the ban is lifted, manufacturers should be free to employ whatever contractual arrangements or restrictive practices they desire in order to control trans-shipment from price controlled nations to the U.S. And we vigorously oppose those provisions of the leading drug importation bills now under consideration, including those in Senate bill S. 334, that would prohibit such arrangements and practices. Those provisions would wreak harm because they would prohibit manufacturers from using free-market measures to forestall the importation of foreign price controls to the U.S.

Notes

1. Roger Pilon, "Drug Reimportation: The Free Market Solution," Cato Institute, August 4, 2004.

2. John E. Calfee, "The Grim Economics of Pharmaceutical Importation," American Enterprise Institute, November 2003.

Roger Pilon is vice president for legal affairs at the Cato Institute. John E. Calfee is a resident scholar at AEI.