It sounds as if President Trump will work to enact plans to allow for the importation of prescription drugs from Canada.
In one of my posts back in January, I detailed as best I could the problems of importing drugs from Canada. Those in favor of such a proposal forget that these drugs are cheaper relative to their American counterparts for a reason. They are subject to what are essentially price controls. Those of us who took some economics classes understand the consequence of price controls whose “price ceiling” is below the market price-they result in a shortage of the good subject to the price controls.
This is what is actually happening in Canada right now, as I detailed in my previous post. It’s no wonder the drugs are so cheap. Because they are so cheap, as the economist will tell you, there aren’t enough for everyone, even in Canada, let alone in the United States. This is why Canadians are opposed to the proposed importation plan-it will exacerbate the problem in Canada.
As for the US, well, it isn’t even entirely safe to say that such a plan would result in lower prices for consumers. John LaMattina wrote a great article in Forbes detailing why. If the US starts importing drugs from Canada, pharmaceutical companies aren’t simply going to increase their supply to Canada. They are going to cap their supply to Canada at the pre-importation plan levels, so there will be little supply of drugs from Canada to reach US consumers.
Of course, Canada could remove its price controls and allow supply to adequately match demand, which in turn might result in a true international market for prescription drugs, but that would be asking a lot. In the meantime, US policymakers need to look to other ideas for lowering prescription drugs costs (I’m looking at you FDA approval process).