July 29, 2003

You heard it here first

My article on July 24 regarding the threat of pharmaceutical companies withdrawing from countries that can export their low-cost drugs to the US seems to be moving into the mainstream. National Review has an article arguing that drug importation is good as a trade war measure to stop taking advantage of the free rider problem of R&D benefiting the world but mostly being collected on drug prices in the US.

Now I happen to agree that free riders are bad things and in a perfect world we'd do this as a liberty enhancing measure but the reality is twofold. The sponsors of this are largely economic illiterates for the most part who believe that there will be no reaction by the pharmaceuticals industry that will counter this. The next largest grouping in my estimation are those cynical enough to know that there will be a reaction and are looking to harness the inevitable controversy to push a control agenda, socializing the industry in pieces, one salami slice at a time. Thus giving in on reimportation is going to raise the stakes at the next decision point and with statists in the legislative driver's seat on this issue, the terrain for the next battle is being framed to their advantage

The article strikes me as taking lemons and making lemonade. That's good as far as it goes but with the world being rather peeved at the US at the moment, the timing of this free rider war is pretty bad. The problem is a question of priorities. I don't predict outright linkage to the War on Terror but a general increase in irritation and a draining of public funds to pay for those more expensive drug prices is bound to have a bad effect in some countries that are currently sitting on the fence.

Posted by TMLutas at July 29, 2003 12:06 PM