JUST BEFORE Christmas, the Bush administration released a report on drug reimportation, concluding that it would be a bad idea to legalize the growing trade in prescription drugs between the United States and Canada. Perhaps not coincidentally, a few days ago -- after President Bush's visit to Ottawa -- the Canadian health minister announced his intention to impose greater restrictions on Canadian mail-order pharmacies that export drugs to the United States. How strange, now, to think back on Mr. Bush's rhetoric before the election. "It may very well be," he told the nation in the heat of the campaign, that "you'll hear me say, 'I think there's a safe way to do it.' " If he meant that when he said it, which seems unlikely, he certainly changed his mind quickly.
We agree that legalizing reimportation would be bad policy, both for technical reasons -- it is impossible to imagine how the Food and Drug Administration could monitor foreign mail-order companies -- and because it is not a good long-term solution to the problem of inequitable pricing. Nevertheless, the current system is also politically and morally unsustainable, and at least until these recent events, it seemed as if the administration knew it. Last year Mark B. McClellan, the head of Medicare and Medicaid, made a series of speeches arguing that American consumers were paying unnecessarily high drug prices at least in part because Canadians (and inhabitants of most other wealthy nations) were, thanks to their governments' success in negotiations with the drug industry, paying unrealistically low drug prices. The logic of that argument was clear: There's no reason that U.S. consumers should subsidize pharmaceutical research for everyone else. The U.S. government ought to intervene, at the international level, to push harder for more equitable drug prices around the world.
In a very minor way, that has begun to happen. At the start of this year, a U.S.-Australian free-trade agreement went into effect that, for the first time, included some language about drug-pricing mechanisms in Australia. Although the strength of this particular part of the treaty has not been tested, it does at least allow U.S. drug companies the right to appeal decisions about drug pricing in Australia, it adds some transparency to the Australian process and it includes some language recognizing the importance of private investment in innovative drugs. This is the first time that a trade agreement has included any language about drug pricing, and it has the potential to serve as a precedent. If the Bush administration does care about inequities in international drug pricing, it should start using its diplomatic and trade leverage more aggressively to address them.