Pfizer Public Policy: Importation

It is understandable that people, especially those without insurance, would look for any way they can to reduce their health care costs. The importation of medicines from foreign countries has been heralded by many as a potential way to save substantial amounts on prescription medicines. However, the facts suggest that it may be much more complicated and less promising than advocates of importation imply.

Key Points

• Importing unauthorized drugs into the United States is opposed by most public health officials, including the FDA. Once a drug is outside the direct control of its original manufacturer, there is a very real danger for counterfeiting or deterioration of the product.
• Contrary to suggestions that importation would save money, research suggests that importation would not result in significant cost-savings for consumers, and that it would harm research and development in pharmaceuticals.
• Ensuring access to adequate health coverage for every American must be a top priority for the health care system. Pfizer is doing its part with the Pfizer Helpful Answers^® program.

Buying drugs from places other than licensed U.S. pharmacies and Web sites is dangerous since it's virtually impossible for the average consumer to tell a genuine medicine from a fake. Regardless of the method of obtaining drugs from Canada or other countries - be it through the mail, over the internet, or even in person - there is a real potential for fraud or harm. Drugs that are imported into the U.S. by anyone other than the original manufacturer have the potential to be counterfeit, of a lower quality due to poor handling, or even harmful. This is largely due to the fact that drugs not imported through lawful distribution channels are not regulated and therefore there is no guarantee of safety. For more information, visit Counterfeit and Importation: Ensuring Safe Medicines.

It's for these reasons that a December 2004 study by the U.S. Department of Health and Human Services (HHS) concluded that American consumers currently purchasing drugs from outside U.S. borders are generally doing so at significant risk.¹

For example, during 2003 when the U.S. Food and Drug Administration (FDA) and the U.S. Customs and Border Protection (CBP) conducted a number of "import blitz examinations" in which they examined international mail and courier shipments of foreign drugs to U.S. consumers, they found the vast majority of imported drugs (upwards of 85 percent) were "violative" products - meaning they did not adhere to FDA standards. In each case, a clear majority of the violative products (about 70 percent or more) were non-compliant because they contained unapproved drugs.²

Fewer than two percent of the thousands of Web sites advertising cheap Canadian drugs are actually based in Canada, according to an FDA-commissioned study released in June 2005.³In fact, most of the sites are in the United States, which indicates that there is probably something wrong with the drugs being sold through those "Canadian" pharmacies, otherwise they'd be sold at U.S. prices. The scorecard featured in Chart 1 reflects some medicines tested after FDA agents responded to spam e-mails describing "Canadian Generics" in a separate study. Problems were found with each tested drug. The controlled substance, Ambien©, for example, was nearly two times the appropriate potency.

• Learn More About Studies on Safety

Some advocate the creation of an inspection system that ensures the safety of personally imported drugs. But such a system would be extremely costly and not fool proof. As shown in Chart 2, it would take a significant amount of resources to inspect personally imported shipments of pharmaceuticals accounting for only a small fraction of the volume needed to meet the needs of American patients. Such an endeavor would require a massive increase in funding for the FDA.

So what about allowing insurers to import from other countries? The evidence suggest that savings to states and large purchasers from importation would actually be quite low considering the substantial negotiated discounts they already receive and the fact that other savings would be absorbed by middlemen.

In fact, contrary to proponents' suggestions that importation would save money, the HHS study from Dec. 2004 found that overall national savings from legalized commercial importation would likely be a small percentage of total drug spending (around 1 to 2 percent). As the study notes, consumers would not be helped much by this policy, as most of the savings would likely go to third party payers, such as insurance companies and HMOs.

Suggestions that the U.S. import drugs from other countries, most notably Canada, fail to recognize the fact that Canada - with just a fraction of the U.S. population - cannot be the medicine chest for America. As shown in Chart 3, if the U.S. had filled all its prescriptions in 2004 with drugs from Canada, it would have exhausted the Canadian drug supply entirely, and it still would need to fill another 3.1 billion prescriptions.

Proponents of importation also do not acknowledge the negative effect importation would have on pharmaceutical R&D. The reason that drugs may be less expensive when purchased outside the United States is that many countries, such as Canada, impose their own price controls. This means the government sets the price at which the manufacturer can sell the drug. Such price controls inhibit medical research and innovation; the absence of such controls in the United States makes it the leading country in pharmaceutical research and innovation (for more information, see Price Controls). Importing pharmaceuticals from price-control countries would be equivalent to setting price controls in the U.S. because in essence, the U.S. would be importing foreign price controls. Because of this, importation would produce a similarly detrimental impact on innovation as price controls: while it might benefit some consumers in the short run, in the long run it would erode private industry's ability to do the risky and expensive R&D that generates 9 of 10 new medicines - and that would be mean fewer new medicines for future generations.

• Learn More About Why Importation is Not a Solution

As it turns out, Americans may be able to save money on prescription drugs just by shopping around at their own states' pharmacies. Consider, for example, the case of Arizona where a study by the state's Attorney General's Office found that prices for 20 prescription drugs varied widely across pharmacies in the state. As shown in Chart 4, for a number of products, the prices differed by as much as 50 percent between the highest- and lowest- cost pharmacies.

The importation debate also often ignores the fact that while brand name medicines are often less expensive in countries that impose government price controls, generic medicines are often more expensive. For example, the HHS report from Dec. 2004 found that, on average, people living in other countries pay 50 percent more than Americans do for generic drugs - a finding that coincides with those from other studies. Both facts are the result of a free-market that allows rewards for innovation but also quickly puts pressure on prices. For more information, see Generics.

While importation is certainly unsafe and unsustainable, with dubious assurances for cost-savings, it also distracts elected officials from pursuing meaningful policies that would provide real help to Americans who lack health insurance. Programs such as Pfizer Helpful Answers^® help provide access to Pfizer medicines for every American who lacks health insurance at a cost that would leave little incentive to seek potentially dangerous medicines from unknown sources. This program is not a permanent solution, but it is much better for those without insurance than confronting the risks of illegal importation.

Chart 1: Cross-Border Sales from Canada Have Increased but Integrity is Questionable

Chart 2: Estimates Suggest Major Costs to Taxpayers for Attempting to Ensure Safety

Chart 3: As a Practical Matter, Canadian Drug Supply Too Small to Have a Real Impact in the U.S.

Chart 4: Within States, Drugstore Prices Can Vary by 50% or More for the Same Prescription

¹ U.S. Dept. of Health and Human Services. Report on Prescription Drug Importation. Dec. 2004. Available at: http://www.hhs.gov/importtaskforce/Report1220.pdf Accessed on Oct. 26, 2005.

² Ibid.

³ Krebs B. Few Online Pharmacies Based in Canada, FDA Says. Washington Post. Jun. 14, 2005.

In This Section

Studies on Safety

Learn more about studies on safety and prescription drug importation.

• Visit Studies on Safety

Why Importation Is Not a Solution

Learn why pharmaceutical importation is not a solution.

• Visit Why Importation Is Not a Solution

Last Updated September 2007