Reimportation Would Not Reduce Rx Costs, CBO Finds

July 28, 2003
The prescription drug reimportation provisions in the House and Senate Medicare bills would not likely reduce medication costs in the United States, according to an analysis of the two bills released Tuesday by the Congressional Budget Office.

Both provisions would allow reimportation of U.S.-manufactured prescription drugs from Canada. The CBO analysis did not consider costs or reduced expenditures associated with the reimportation provisions because both require the HHS secretary to certify the safety of reimportation, which the Bush administration has made clear it has no intention of doing."

However, the CBO analysis said that implementation of the reimportation provisions "probably would not produce substantial savings to the federal government" because brand-name pharmaceutical companies "are unlikely to increase their sales in Canada enough to permit a significant share of their United States market to be imported from Canada."

"Canada's market for prescription drugs is much smaller than that in the United States. If manufacturers were unable to limit the supply of drugs entering the U.S. market from Canada, the likely result would be that brand-name drug prices in Canada would rise much more than the price in the U.S. would decline," the CBO analysis said.

A Canadian regulatory affairs consultant told the Minneapolis Star Tribune that Canada would not have the volume of prescription drugs to meet increased U.S. demand because the Canadian market is less than 10 percent the size of the U.S. market, In addition, some pharmaceutical industry lobbyists have said that U.S. companies might simply end the sale of their products to Canadian pharmacies that sell the medications to U.S. residents.