The Affordable and Safe Prescription Drug Importation Act is what real health reform looks like
The battle over the future of the Affordable Care Act (ACA) has clearly begun in earnest. A striking feature of this debate is the disconnect between commonly cited complaints about the ACA and prescriptions offered by Republican lawmakers. For example, the most common complaint about the ACA’s exchange-based insurance policies is that they are too “thin”—deductibles, co-pays, and other cost-sharing burdens are too high. This complaint is understandable. For people used to getting employer-sponsored insurance (ESI) who find themselves now buying in the exchange, it is true that these plans are thinner than most ESI plans. But we should remember that the pre-ACA individual market for insurance offered much less comprehensive plans that required much larger out-of-pocket costs. For example, fully half of the plans offered on the individual market before the ACA would not be allowed today precisely because they demanded too-costly out-of-pocket exposure.
Fixing the problem of too-high exposure to out-of-pocket costs is straightforward: the exchange subsidies for premiums and cost-sharing could be increased. There would be plenty of members of Congress—mostly (or exclusively) Democratic—who would sign onto this. The obvious objection to this is that it costs taxpayer money. This, in turn, begs the question of are there any policy changes that could both lower the cost of health care to consumers and also the tax bills of households?
Luckily, there are such policies. Senator Bernie Sanders and co-sponsors are introducing the Affordable and Safe Prescription Drug Importation Act. This would instruct the HHS Secretary to put forward regulations allowing the importation of qualifying prescription drugs from Canadian sellers. In two years, importation from other advanced countries would also be allowed. The bill sets high standards to insure that only safe and effective prescription drugs could be imported, and there would be strict controls following the drugs into the United States to insure their proper dispensing.
The theory behind this bill is simple: drug prices in our advanced peer countries are substantially cheaper than in the United States, so we should leverage the ability of free trade to lower prices in the United States. Our failure to allow this today is surely the most costly form of protectionism (in goods trade, anyhow) still plaguing our country today, and yet it is never addressed by those in charge of our trade policy.
Prescription drug prices in the United States are needlessly high, and the economic stakes are large: U.S. patients consume more than $300 billion worth of prescription drugs annually, with the government picking up more than a third of the tab. The beneficiaries of high drug prices are shareholders and corporate managers of pharmaceutical companies, some of the most profitable corporations in the world. The losers from these high drug prices are America’s working families. It is time to introduce some genuine economic competition into this highly protected industry.
Will this bill alone solve all of our health care cost and access problems? Of course not. There is no silver bullet here, and further progress will have to be made. One obvious next step would be legislation requiring the federal government to bargain aggressively with pharmaceutical providers for the tens of billions of dollars we spend as taxpayers through the Medicare prescription drug program. But the Affordable and Safe Prescription Drug Importation Act is an excellent start. It aims to find genuine efficiencies in our wildly dysfunctional health system, and it can lower costs for both patients and taxpayers.