Here's a video being distributed by the Louisiana Democratic Party, which was provided to them by a supporter, of Sen. David Vitter (R-LA) explaining how he's supported prescription drug re-importation from Canada, as a means of destroying Canada's prescription drug system -- which he says will cause prices to go up for Canada, and down for America:
Vitter's economics seem like they might just work -- or maybe not. Canada and other countries negotiate lower prices with the drug companies, who then demand exorbitant profits from U.S. consumers and our relatively free market. Arguably, by overwhelming other countries with American demand, their systems would break down. The next step here, is that Vitter believes this will cause prices to go up for everyone else, and down for us. (But we'd be curious what health care economists would say).
As Vitter told his questioner, who is apparently an Obama supporter: "I don't support price controls, but I actually think re-importation would cause that system, as well as these varying prices, to collapse. That make sense?"
Of course, this is assuming the drug companies wouldn't take advantage of their inelastic demand curves by just jacking up prices for everyone. And really, this whole scheme to destroy other countries' social welfare programs for American benefit isn't mighty neighborly of Vitter, is it? Check out the full dialogue after the jump.
Check out the full dialogue:
Vitter: (reading back a question) 'If socialized medicine is such a bad idea, why do you propose we import medicine from a country that has a socialized health care system?' I guess you're talking about Canada, and similar places, Conrad?
Questioner: Correct.
Vitter: Well, good question, Conrad. I'm for re-importation not because I wanna import price controls, which Canada has, you're right. It's because I believe re-importation will cause the pricing system world-wide that the big drug companies exploit to collapse. Right now the big drug companies are able to charge very different prices in different countries, and of course we pay the highest price of all. If they did that, like they do now, but then we can write off to Canada, and pass certain safety provisions, and get drugs from there - guess what? That system implodes. That system can't survive. So my ultimate goal, in terms of re-importation, is causing that system to collapse, so there's a true, world-wide price for a drug. And that might - wouldn't might - that would increase the cost in Canada, that would dramatically decrease the cost in the US. So that's where I'm coming from. You want to follow up on that?
Questioner: Okay, um - so Canada, their health care system, they're doing something right, I guess? So are we taking a page from their book?
Vitter: No, I don't - again, I don't support price controls, but I actually think re-importation would cause that system, as well as these varying prices, to collapse. That make sense?


Davis_X_Machina
August 20, 2009 4:28 PM
Didn't Lenin say "The best way to destroy a capitalist state is to first debase their currency, then import their pharmaceuticals"?
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Minne sconsin
August 20, 2009 4:29 PM in reply to Davis_X_Machina
Nah. That was Mao.
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Stiggs
August 20, 2009 4:34 PM in reply to Davis_X_Machina
I am the walrus? I am the walrus?
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Problem Is
August 20, 2009 7:16 PM in reply to Stiggs
Shut the f#@k up, Donny... V.I. Lenin. Vladimir Ilyich Ulyanov.
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Stiggs
August 20, 2009 4:32 PM
Vitter is:
a) Dumb
b) Dishonest
c) Douchey
d) All of the above
In his defense though, Vitter is just trying to eliminate some of that foreign goodwill which Obama has been gathering in an attempt to destroy America.
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NewsNag
August 20, 2009 6:48 PM in reply to Stiggs
I've got a list too about Vitter's good neighbor policy.
1. Stupid
2. Stupid
3. Stupid
4. Stupid
Stupid because no one controls drug prices except the drug makers, who will make prices high for everyone.
Stupid because, well, it and Vitter are just so f'ing stupid.
Stupid because Canada could simply make it illegal to export drugs to the
USA.
Stupid because Canada would retaliate by cutting back on exports of forest products to the U.S. that go into making Vitter's adult diapers. Then where would he be? Stupid Republicans can't even look out after their own self-interest.
Seriously, Vitter's big idea is like what you would hear around those backwoods cracker barrels where old people nod a lot and grunt and say yep and boy howdy wouldn't it be nice if we could turn the clock back to the 1950s. That's about the level of thought that went into Vitter's demagogic idiocy.
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Armageddon T. Thunderbird
August 21, 2009 7:41 AM in reply to NewsNag
First of all - I support single payer. But the cost of drug prices is not totally controlled by drug companies. The cost of conducting clinical trials - required (as they should be) to demonstrate that the drugs are safe and effective on humans - is very expensive. And even then - there is no guarantee that everything will work-out. So it could be a total loss in the end. Generally when one is willing to risk a lot of money on something the reward for when you get it right is proportional to the risk if you happen to get it right. If you remove that reward - why should people invest in a cure. Of course - you could move drug development out of a capitalistic framework. Like we do with police and firefighters etc. What would you suggest?
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bvd
August 20, 2009 4:45 PM
Eric - Maybe you should contact the Canadian government and ask them their reaction to a sitting US Senator publicly stating that he is plotting to undermine the health care system - and economy - of Canada, an ally, a democracy and a sovereign nation.
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Minne sconsin
August 20, 2009 4:53 PM in reply to bvd
I was thinking about that too. I wouldn't be surprised if there was a diplomatic response.
Of course, Hillary could just respond, "you know Vitter, he's just a diaper-obsessed douchebag".
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tiowally
August 21, 2009 12:42 AM in reply to bvd
Eric should call the Canadian Ambassador to the U.S.:
Ambassador Michael Wilson (202) 682-1740
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Armageddon T. Thunderbird
August 21, 2009 7:59 AM in reply to bvd
So we are going to start concerning ourselves about U.S. government officials plotting to undermine other governments? Great idea :)
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here
August 20, 2009 4:50 PM
I think he was just saying that to dodge the 'taking a page from their system'. So i'm not sure how honest it is to play up that single line when most of his comments were reasonable (ie reimporting to circumvent regional pricing).
Can you call his office and see if they'll directly respond to the 'destroying Canada's system' issue?
I mean that response may count as the least dishonest Republican response on healthcare i've heard this time around.
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Armageddon T. Thunderbird
August 21, 2009 8:01 AM in reply to here
Here's something more dishonest..."we want a bi-partisan solution". ...when in fact they just want to kill reform all together.
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mike from Arlington
August 20, 2009 4:50 PM
I second BVD's request. Perhaps to the local Canadian Embassy.
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Rdog
August 20, 2009 4:56 PM
Can somebody ask Vitter what happens AFTER the Canadian system collapses? Where do we then get our cheap drugs? Do we then go poach Mexico? After Mexico, who's next?
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Armageddon T. Thunderbird
August 21, 2009 8:02 AM in reply to Rdog
Grow your own...um...maybe we're not talking about the same thing.
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Jaycal
August 20, 2009 5:21 PM
That's a great idea! Lets drive up the Canadian demand, so they have greater leverage in negotiations with big pharma! Maybe this way, it'll finally make drugs more affordable as long as our seniors and health plans are buying them from Canada. I assume Vitter was one of the wankers who agreed to subsidize big pharma so they could charge us higher prices here in the US?
On the Stiggs test, I choose a) and c) for Vitter!
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macdonmt
August 20, 2009 5:38 PM
You know, without thinking too much on this:
The argument is that drugs are cheaper to Canadians than Americans because Canada regulates the price (through their single payer health care) so the drug companies gouge Americans to make up the difference.
If we increase the demand in Canada, won't that just increase the prices here? (if you put a little kid on one side of the seesaw, and a big kid on the other, the little kid is in the air... if you put another big kid on the big side, the little kid goes higher... there's no ground in this example because of global warming)
Also, yes, it is taking a page from their book. Conversely, if we had a single payer system here in the US, it would do the same thing. Namely, stop the gouging.
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AlphaLiberal
August 20, 2009 5:40 PM in reply to macdonmt
I think you thought too much about that.
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AlphaLiberal
August 20, 2009 5:40 PM
This is really some Class A crazy. Plus, you know, he's Diaper Dave. Can't we keep him around a few more years just for fun?
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slb
August 20, 2009 5:41 PM
Does this make Vitter an international terrorist?
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Armageddon T. Thunderbird
August 21, 2009 8:07 AM in reply to slb
Good question. Do we consider U.S. Congressmen plotting bad things against foreign governments to be terrorism? Works for me...
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tpmgary
August 20, 2009 5:52 PM
wow, I'd love to hear an economist's take on this. Anyone have Krugman's email?
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Obey
August 21, 2009 9:56 AM in reply to tpmgary
It all kind of depends if the prices in these countries are above or below cost (including R&D). So take a ball-park figure of 10 cents for each dollar in revenue going to productive R&D. Add 20 cents for admin, production, basic marketting. So are the foreign prices above or below 30% of US prices. If they're above, then re-importation is a win for the US and no one loses. If it's below, then the US is effectively subsidizing overseas consumers and the drug makers would have to hike prices across the board.
But that's kind of theoretical. The drug makers would just demand export restrictions in price-negotiations with these countries. Yet, could the US then sue them for illegal trade practices at the WTO? Ah, the possibilities are endless...
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JadeZ
August 20, 2009 6:41 PM
forget what these hacks like vitter say.
I want to know how did the people who vote for them get so stupid??
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Armageddon T. Thunderbird
August 21, 2009 8:10 AM in reply to JadeZ
Read Paul Krugman's book "The Conscience of a Liberal". He explains it nicely.
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constitutionalist
August 20, 2009 7:48 PM
Why does Vitter remind me of that South Park movie? Had a catchy little song....."Blame Canada!"
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nova voter
August 20, 2009 9:04 PM in reply to constitutionalist
he reminds you of that? that's weird. he actually reminds me of a dump i took about 45 minutes ago. it looked like fuzzy brown snake. stunk, too.
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Armageddon T. Thunderbird
August 21, 2009 8:11 AM in reply to nova voter
you're eating too much dairy.....
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congressive
August 20, 2009 9:22 PM
He, and all these douchebags, can't bring themselves to admit even one single good thing about Canadian healthcare, so they have to say stupid things like this.
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tiowally
August 21, 2009 12:49 AM
Fun Fact About Canadian Pharmaceuticals
In 1969, the Liberal government of prime minister Pierre Trudeau passed a law to force down the prices charged by big multinational drug firms. This compulsory licensing law allowed anyone, on payment of a royalty, to make generic, or copycat, versions of patented brand-name drugs. In effect, it wiped out the monopolies the brand-name firms had been granted under patent law.
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Armageddon T. Thunderbird
August 21, 2009 8:16 AM in reply to tiowally
To prove that a drug works you must conduct multiple clinical trials. Each one can cost $100 million and in the end - the drug may still not work or be approved. Drug development is a risky business. To get investors to invest in risk - the reward must be proportionately high. If you want to replace that funding mechanism with another that's fine. I'd be interested to hear your plan.
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afisher
August 21, 2009 2:29 AM
Just one more thought on this topic. I suppose everyone here thinks that all the pharmaceutical companies are running at maximum capacity? If demand goes up, wouldn't the company simply increase the supply. Also, I seriously doubt that pharmaceutical companies are losing money in Canada, it is just the majority of Americans are getting ripped off because there is no pricing negotiations....well, except for the VA, which does negotiate contract pricing for drugs.
Opps, that is 2 thoughts...so I'll blow it on a third....Vitter is stupid!
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Armageddon T. Thunderbird
August 21, 2009 8:21 AM in reply to afisher
I don't think your example of running at max capacity is the best way to describe the situation. Manufacturing costs are not the driving issue here it is research and development costs which include deciding which therapeutic area to focus on, discovering "interesting" molecules, and then proving that they are safe and effective on humans. Think of a software company. The cost of the first CD containing your product is $500 million. The price of the second CD is ten cents.
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Snig
August 21, 2009 7:57 AM
The part of it that Vitter may not believe is that the drugs on average don't cost that much to produce. The cost we pay is stated as the back cost of the research, and the research for every would-be drug that fizzles. Drugs are not close to being sold at a loss. They can charge what the (wait for it) MARKET ALLOWS, it just discourages permanent monopolies through patent protection. You'd think a capitalist conservative would like that. However, the prices we have currently are disproportionately very high, high enough that drug makers profits are still ludicrously high. For new drugs, it could theoretically make it less insanely ludicrously profitable, but would have not have any effect on existing drugs, as the model already exists to make them cheaply. There have always been new drugs developed, even in Canada, as a new product is always good for business. Also, in our existing system, there is the emphasis in pharmaceuticals to get the new drug or new formulation to replace the drug that's going to lose their patent protection, which is developing drugs for profit incentive, not for therapeutic benefit.
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Armageddon T. Thunderbird
August 21, 2009 8:33 AM in reply to Snig
When you say the cost included R&D and drugs that don't work out you are correct. That's usually referred to as risk. Every capitalist decides to take risk when they invest. All things being equal - or restated - if the market is working properly - then the reward will be proportional to the risk. Why else invest (assuming humane considerations not in the equation)? So if you are going to limit the reward, then you are going to limit investment which means that new drug development will mainly occur in low-risk areas. Is that the outcome you are looking for? I'm not criticizing...just asking. If you follow this approach - you will have to figure out how risky drugs will be creating going forward. Should we look at the ones costing society so much money to deal with? Then focus on them? Should we form government-based groups that replace high-risk/high-profit with something else? Should we forget about drugs and focus on prevention and "clean living?" Should we tax unhealthy lifestyles and activities to pay for the drugs needed to cure the illness that lifestyle causes?
What's your plan?
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Texas Aggie
August 21, 2009 12:55 PM in reply to Armageddon T. Thunderbird
There is a misunderstanding here. The drug development is mainly a taxpayer funded operation done at the major research universities. Drug companies by and large don't do much of their own development. What they do is "me, too" drugs where they take a basic molecule developed by someone else and attach various pieces to it hoping to get something that they can market with their own patent, but without anywhere near the risk of coming up with a dud.
The part that is expensive for the drug companies, besides advertising and marketing, is doing the human testing, but now that isn't as expensive as it used to be because there are private organizations doing it on contract in third world countries that have more relaxed oversight of drug trials.
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Snig
August 21, 2009 11:08 PM in reply to Armageddon T. Thunderbird
New drug development does occur in relatively low risk fields vs. maximum human benefit endeavours. More reward for viagra type drugs than for treatments for malaria or diarrhea. As noted by Texas Aggie below, we do have goverment-based groups such as the major universities that do a lot of the heavy lifting for drug development. Additionally entities such as the CDC, FDA and NCI have played signficant roles in public health, including prevention and encouraging "clean living", and should continue to do so. NIH and specifically NCI has played a role in drug development. As per the NCI wiki: "According to a 1996 NCI analysis of drugs approved by the FDA, two-thirds of the anti-cancer drugs approved as of the end of 1995 were NCI-sponsored Investigational New Drugs" Yes, clinical trials are expensive. Your public health questions are worthwhile questions, but kind of off topic. I think there's a balance that can be struck between nationalizing all drug companies for the glory of the proletariat and allowing drug companies to print their own money. Right now, I think that we're erring on the side of letting them print their own money. Doing an end-run around them by going to Canada won't hurt anyone, may help some people afford drugs.
My plan remains as it has always been: Eat the rich, the poor are tough and stringy.
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Texas Aggie
August 21, 2009 12:49 PM
It doesn't make much sense. It won't undermine the Canadian health system because they don't subsidize the drugs, they just make sure that the profit margin is not outrageous. The drug companies are still making money off the Canadian consumers, just not as much as they do off US consumers. So the more drugs we buy from Canada, the more drugs the Canadian pharmacies buy from Big Pharm. The only way it will bring our drug costs down is by the drug companies realizing that as long as they are overcharging to the present extent, they will be in competition with Canada's pharmacies.
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