We are now witnessing an extraordinary game of chicken between the states and the Bush administration. About a dozen states are gunning it toward the Canadian border in pursuit of cheaper prescription drugs. The federal government, meanwhile, is racing to block the way. If the states succeed in defying Congress’ ban on drug imports, everything will change: U.S. drug companies will no longer be able to charge Americans up to twice what foreigners pay for the same pills.
The hottest head on the freeway belongs to New Hampshire’s Republican governor, Craig Benson. He has demanded a federal waiver that would let his state import U.S.-made drugs. And he’s setting up an official Web site to help private citizens buy their prescriptions in Canada.
"We will work within the law wherever possible," says Benson’s spokesman, implying a right to also ignore the law.
Two days after Benson’s announcement, representatives from 10 states met in Atlanta with Canadian pharmacies to discuss doing business together. The potential savings are huge. One participant, Illinois, puts the savings from buying drugs in Canada at $94 million. Also attending were Ohio, Oklahoma, North Carolina, Massachusetts, Alabama, Vermont, West Virginia, Delaware and Louisiana.
Drugs are cheaper in Canada because Ottawa negotiates the prices pharmaceutical makers may charge there. Most other countries do likewise. The United States, by contrast, keeps its people captive to whatever price the drug companies can get away with. Need we add that the industry is a very generous contributor to political campaigns?
Such policies are not very popular with the electorate, so the powers in Washington have developed complicated rules designed to hide what they’re up to. For example, the new Medicare law cleverly allows Americans to bring drugs back from Canada — but only if the Food and Drug Administration deems them "safe," which it won’t do.
To calm the natives, the administration has left open a safety valve: It looks the other way when individuals bring back medicines from Canada or Mexico for their own use. Slapping cuffs on grandma as she steps off the bus from Algodones is not good P.R.
But states and cities are another matter. They are enormous purchasers of drugs for workers, retirees, Medicaid patients and prisoners. Once they start going to Canada for drugs, the ban becomes meaningless.
The battle is not without its comical moments. Three of New Hampshire’s four congressional delegates voted with the Republican leadership against legalizing drug imports. One of them, Rep. Jeb Bradley, now praises Gov. Benson for defying a law he helped pass. The two senators, John Sununu and Judd Gregg, had the good sense not to comment.
Is there a states’ rights issue here? "From a constitutional perspective, it’s a fairly clear-cut case," says Timothy Conlan, a professor of government at George Mason University. "Congress has the power to regulate interstate and foreign commerce."
However, the Bush administration is under no obligation to block the road to Canada. "It’s likely that the administration has enough discretion that if it wanted to allow states to do this, it probably could have allowed it," Conlan adds. And giving the states the green light would have fit in with the president’s stated pro-federalism agenda.
(Although conservatives in Washington speak of promoting states’ rights, they often bar state action when it conflicts with the interests of the private sector. "That pattern is pretty consistent," Conlan says.
In discussing this matter, it would help to recognize that the pharmaceutical industry is not like most businesses. The public considers its products a social good and helps pay for them with large taxpayer subsidies. Further, a new medication enjoys many years of patent protection — during which its maker has the exclusive right to sell it.
So there’s no point pretending that Coumadin is like a camera battery — a product whose price can be sensibly set by market forces. The federal government must sit down with the pharmaceutical industry and work out a new arrangement for pricing drugs.
Until then, we will be treated to the weird sight of Americans begging foreign governments for relief on the price of American-made drugs. The states’ mad dash to the Canadian border shows more than a dissatisfaction with Washington policy. It demonstrates a growing contempt for it.
Froma Harrop is a Providence Journal columnist. Contact her by writing to
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