Blame Canada
Last week, the governor’s office announced that Gov. Tom Vilsack is considering buying drugs for state employees from our neighbor to the north, a trend currently en vogue among the nation’s entitlement class and the politicians who answer to them.
We’re all for free choice, of course. But before our governor makes his decision, we’d like to point out a few things.
First, there’s a reason the collective value of the biotech sector of the Toronto Stock Exchange stands at $30 billion – one-eighth the size of New York City-based Pfizer Inc. alone. Pharmaceutical companies are in business to make money, and they’ve determined that their best chances of doing so are in the United States. Over the past 15 years or so, drug makers from around the world have been moving their research operations and headquarters to the United States to take advantage of our favorable taxes (relative to other developed countries) and educated workforce.
In exchange for profits, U.S. drug makers have defeated diseases and illnesses that have plagued the human race for millennia. We can’t name the last major drug a Canadian company has invented.
A statement from the governor’s office said people are “baffled” about the lower cost of prescription medications in Canada. We’re happy to clear up any confusion. Drugs cost less there because Canadian taxpayers subsidize them. In purchasing drugs across the border, we’d presumably be benefiting at the expense of working Canadians, who are already laboring under a far higher tax burden than Americans.
For instance, Canadians earning less than $31,000 (we mean that in Loonies, not dollars) a year pay 26 percent of their earnings back to the government. In the United States, those who make less than $40,000 pay 15 percent and those earning less than $10,000 don’t pay any federal income tax at all.
We’re tempted to tell the Canadians tough luck. If we benefit from the policies they vote for, so much the better. The same goes for drug makers, which have chosen to give price breaks to those who buy in bulk.
Some apparently believe drugs are too expensive and are trying to pressure the U.S. pharmaceutical industry. That’s the way the game works, and we wouldn’t change a thing.
Free choice, however, swings both ways. Drug makers aren’t going to take sinking profits lying down. They could stop selling to foreign markets altogether (an unlikely event), or stop giving them favorable prices. U.S. courts could outlaw over-the-border sales of drugs altogether.
Rather than rely on the good will of working Canadians, we’d rather that Vilsack and other government leaders work to lower cumbersome government regulations, including finding ways to spur the Food and Drug Administration to move more quickly in approving new drugs. At the least, Iowa and other states ought to flex their cooperative muscles and find ways to buy drugs collectively.