Lets Rediscover Imagination

Several times a year we jump in the car and head south about 175 miles to Nogales, Mexico. It is always a fun trip, rummaging in the shops there and enjoying a Corona cerveza while listening to mariachis in a local pub. But the purpose of the trip is more serious. Our main objective is for my sister to replenish her supply of prescription drugs. Typically, she is able to save between 40% and 60% on the medication she takes.

It is obvious that prescription drugs are big business in the Mexican border towns. It seems as if every other store is a Pharmacia advertising all of the popular drugs. Apparently, selling prescription drugs is more profitable than hawking fancy belt buckles and hand-tooled belts, formerly the staple of the tourist business in Nogales.

More recently, I have been getting faxes indicating that one can save by buying prescription drugs from Canada on the Internet. Savings illustrated in the faxes compare favorably with those available in Mexico.

The Nov. 8, 2002 issue of the Wall Street Journal features a story about inexpensive drugs from Canada being available at the Mall of America in Minneapolis. Other articles in numerous publications tell of organized busloads of people from the New England states making regular sojourns into Canada for cheap drugs. Retirement communities in Arizona and California also organize bus trips into Mexico for the same purpose.

Such purchases are technically illegal, but the government appears to tolerate the practice in the interest of the wider goal of providing access to lower cost drugs, particularly for senior citizens. More recently it has been reported in the press that associations representing U.S. and Canadian pharmacies have taken steps to discourage the foregoing practices. My guess is that those seeking affordable drugs will not be so easily discouraged.

This disparity in the price of prescription drugs between the U.S. and our two neighboring countries raises the all-important question–why?

One of the important subjects Congress will be debating in the coming months is the question of the governments role in providing such drugs to senior citizens in more affordable ways than at present. While this is a critical issue at this time, it seems to me that a more important first step should be to bring down the costs of the drugs. It will be a lot easier to transfer drug purchases to a government-sponsored plan if the prices are lower. Hence, that question–why are drugs higher here than elsewhere?

The foregoing disparity in prices between countries makes one point quite clear–production costs are not the problem. Production costs– making the pill and putting it in a box for sale–should not vary that much between countries. Distribution costs, I suppose, could vary.

The pharmacists dispensing pills in the U.S., being more professional than the clerks selling the same product in Mexico, are no doubt better paid. However, I suspect that greater efficiency and higher volume may tip the scales in favor of our distribution system or at least equalize that cost. Critics and supporters of the current system suggest that the answers lie elsewhere.

Critics argue that drug companies spend too much money on advertising and promotion. They also allege widespread monopoly pricing made possible by unreasonable patent protection. Critics also suggest that drug companies make too much money.

Defenders of the system counter by pointing out the tremendous costs associated with research and development. They contend that absent the ability to recoup such costs, the development of new and more effective drugs would grind to a halt. Companies also claim that in this country they also bear the burden of excessive settlements in lawsuits involving their products.

A third area of criticism is leveled at the consumer who insists on the most expensive drug when suitable alternatives are available at lower costs–their point being that you dont need a cannon to kill a flea.

There is, I believe, validity in all of these arguments, albeit in varying degrees. There should be no disincentive to research and development, and the system does not need the burden of excessive tort liability. Patent protection should be reasonable rather than abusive, and sales promotion should be able to demonstrate that it lowers cost rather than increasing it.

One of the more interesting programs recently featured on public television was “Frontier House.” This series of six programs told of the challenges and experience of three families that tried to recreate life on the Montana frontier in 1883. For five months they left behind the comforts of the 20th century for the hard life of the Western frontier.

In one of the last episodes they were asked what they had learned. A nine-year-old boy replied, “I discovered imagination.”

This incident reminded me that philosophers have said that imagination is often more important than knowledge, for imagination allows you to bring two known objects together and create something that does not exist–for example–a purple cow.

The problems associated with high drug costs can be solved, but it will require more imagination and forbearance than has been displayed up to now.

Why not a compensation system to replace lawsuits? Giving up the right to sue for damages has little relevance to a person who cant afford to buy the drug in the first place. Why not grants for research in exchange for shortened patent protection? Why not use our imagination more and rely less upon sophistication tied to special interests?


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 25, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.