Taking The Worst Of Privatized And Socialized Medicine, Bernie’s Prescription Drug Plan Is For The Birds

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Jared Whitley Contributor
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It’s difficult to dislike Bernie Sanders. Even if you don’t agree with him, it’s hard to doubt his motives. Even if his ideas seem so far out of left field they’re practically in the stands, he seems like he doesn’t want to harm a soul. His sincerity warms even my cold, ruthless conservative heart.

Unfortunately, my conservative brain sometimes gets in the way.

This came up about a year and a half ago for many of us when Sen. Sanders publicly illustrated a clear misunderstanding of basic financial principles.

Economists took to the Internet to explain to a presidential candidate that loans on houses and cars have lower rates than education because houses and cars have inherent value so if I default, the people who kindly loaned me money can get some money back for the favor they did for me. You can’t get any value back from someone who wasted your money on six years of uncompleted education.

  1. So now we have to do a similar exercise with Bernie’s thoughts on prescription drugs.

Sanders recently introduced the Affordable and Safe Prescription Drug Importation Act, which would force the Department of Health and Human Services to allow wholesalers, pharmacies, and others to import qualifying prescription drugs from licensed Canadian sellers. The stated goal is to “to lower the skyrocketing cost of prescription drugs by allowing Americans to import safe, low-cost medicine from Canada,” according to his press release. Eventually this could be expanded to allow similar imports from other OECD countries.

On the surface, this sounds pretty good. I mean everything from Canada is good, right? Whether it’s their delicious bacon or that dreamy Justin Trudeau. Sanders wants as much of Canada in America as he can get. (Except of course the thing we’ve needed from them the most for the last 10 years: their oil.)

But a closer inspection shows that the bill is not all smiles, sunshine, and birds landing on your podium.

How bad could it be?

The primary problem with this legislation is inadequate safety controls: it permits the distribution of drugs from outside both the control of the manufacturer and FDA jurisdiction. These imports would fall outside of the Drug Supply Chain Security Act (DSCSA) that requires accountability from foreign sellers within a closed distribution system. Also there’s no assurance that the documentation foreign sellers provide to the FDA is accurate or that their drugs are legitimate.

Not only would these drugs fall outside US jurisdiction, they would also fall outside Canadian jurisdiction: there’s no enforcement mechanism to ensure that a drug is actually approved for use by patients in Canada.

Moreover, Sanders’ bill doesn’t prohibit transshipment (i.e., the shipment of goods via an intermediate destination), which is commonly used by smugglers, cartels, and other criminals to masquerade the original point of origin of their goods.

All of this is inviting the kind of problem we had in the 1980s, when millions of counterfeit antibiotics and birth control pills were snuck into the United States.

But how bad could it really be?

The legislation would also permit the importation of misbranded brands, meaning that they wouldn’t need to bear adequate directions. Allowance for misbranding opens the door to both 1) false and misleading advertising and 2) failure to comply with the child-resistant packaging requirements of the Poison Prevention Packaging Act!

The Sanders importation bill also contains a “forced sale” provision that violates the basic tenets of how the US government should regulate businesses. Forced sale violates free trade, is unworkable for any business, and will import foreign price controls that harm Americans.

Sanders would restrict a manufacturer’s ability to manage its most basic business functions and to enforce fundamental contracting provisions, all under the umbrella of fighting “price discrimination.” This includes:

  • Who they can sell their products to
  • The quantity of those product that it can sell to a given buyer or in a particular market
  • The price
  • Terms regarding export of the product, thereby abrogating its contract rights

The bill has a bizarre provision that protects foreign sellers over domestic sellers: it prohibits domestic pharmaceutical manufacturers from restricting, denying, or delaying supplies of its own supplies of prescription drugs to any certified foreign seller. That means unfettered foreign demand could result in domestic drug shortages.

Moreover, there’s no guarantee that importers would actually pass their savings on to consumers. Even if the bill controls the price manufacturers can charge, it doesn’t control the price foreign buyers charge their customers. The London School of Economics has shown that in European parallel trade, arbitrageurs (their fancy word for middle-men) retain almost all of the price difference between markets, with both payers and consumers obtaining virtually no savings.

So we have an interesting formula for legislation here: typically, ideally, you try to sell a bill by combining the best of what both sides have to offer. Here we have the opposite. We have the worst of socialized medicine (price controls, drug shortages) combined with the worst of privatized medicine (no accountability, no safety precautions).

Again, I like Bernie. It’d be fun to have a pancake and Vermont maple syrup breakfast with him on the Fourth of July. But if I got food poisoning and needed some clearly labeled medication, approved by appropriate FDA authorities, and definitely not from smugglers, I’d be safer and healthier if Bernie weren’t in charge of my medicine. If he needs to go back to school to learn some of these basic principles, I’ll reach into my own pocket to help pay.

Charging a reasonable interest rate, of course.