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Importing medicines from abroad carries risks, legal scholar says

Mark Reutter, Business & Law Editor

Released 1/16/2007

CHAMPAIGN, Ill. — Importing prescription drugs from overseas, a plan advocated by Illinois Gov. Rod Blagojevich and many senior citizen groups, may lower the price of drugs, but poses serious safety risks, according to a University of Illinois scholar.

Imported drugs could result in a rash of counterfeit products and improper labeling, which would be hard to trace and difficult for the Food and Drug Administration and other agencies to regulate, Vaishali V. Shad says in the current issue of the University of Illinois Law Review.

Ensuring the safety, purity and effectiveness of drugs has been a major regulatory issue ever since the heyday of dubious – and sometimes lethal – patent medicines a century ago. “Because minimal changes to prescription drug ingredients can mean the difference between life and death, the public welcomes that the drug industry is heavily regulated. Therefore creating lax standards for overseas drugs would not be a solution to the problem,” the former editor at the journal wrote.

What’s more, “the FDA simply cannot be expected to keep up with the vast international pharmaceutical industry. Even if the FDA were to approve drugs from certain countries or certain foreign companies, approval would open the door for others to try to get their drugs into the U.S.”

Offering government subsidies or reimbursements for prescription drugs does not appear to be a viable solution over the long run, given the strong opposition to government-funded health care and the temptation for drug manufacturers simply to raise prices on subsidized drugs.

A more promising free-market solution, the Illinois scholar said, would be to decrease the number of years that drug manufacturers can patent brand-name drugs.

Current law prevents generic versions of FDA-approved drugs to enter the market for 20 years. With the fast pace of medical discoveries and changing technologies, such a long guarantee of patent protection is outdated.

“Decreasing the patent period will bring generic drugs to market faster,” Shah wrote. “Although generic brands may not be available for all drugs, they are available for most.”

Generic drugs contain the same active ingredients as brand names, but do not use the same inactive ingredients such as coatings, binders and capsules. While brand-name drugs require stringent testing before they are approved by the FDA, the agency does not require new safety and effectiveness tests for a generic version of an approved drug.

The drug industry’s oft-stated concern that reduced patent protection would discourage research and development of new drugs could be taken into account as new rules are devised by Congress.

Another solution would be to create a federal agency to oversee the pricing process of manufacturing companies. “Manufacturers would still be free to set prices to recover costs and make a profit, but the agency would make sure that there is no abuse in determining the price,” she wrote.

A variation of this idea is being pushed by congressional Democrats over the objections of the drug industry and Bush administration. The bill calls for the government to negotiate the prices of prescription drugs for Medicare beneficiaries. The premise is that the government would have greater bargaining power than private health plans or individual consumers to negotiate lower prices.

Under current law, the U.S. Department of Health and Human Services, which administers Medicare, is explicitly forbidden from negotiating lower drug prices for Medicare beneficiaries. This law was enacted after intense lobbying by the drug industry.

The proposed bill would require – not just authorize – the secretary of health and human services to negotiate prices with manufacturers. Michael O. Leavitt, the health secretary, has said that he does not want the power to negotiate Medicare prices with drug makers.