Friday, January 18, 2008

The Real Maverick

George Will has a column today taking a slice out of John McCain. No general complaints here: McCain is indeed one of the bad guys running this year. But I do have some complaints on specifics.

Regarding the reimportation of drugs from Canada, which McCain supports, Will has the following to say:

In ABC's New Hampshire debate, McCain said: "Why shouldn't we be able to reimport drugs from Canada?" A conservative's answer is:

That amounts to importing Canada's price controls, a large step toward a system in which some medicines would be inexpensive but many others -- new pain-relieving, life-extending pharmaceuticals -- would be unavailable. Setting drug prices by government fiat rather than market forces results in huge reductions of funding for research and development of new drugs. McCain's evident aim is to reduce pharmaceutical companies' profits. But if all those profits were subtracted from the nation's health care bill, the pharmaceutical component of that bill would be reduced only from 10 percent to 8 percent -- and innovation would stop, taking a terrible toll in unnecessary suffering and premature death. When McCain explains that trade-off to voters, he will actually have engaged in straight talk.

Erm - nice straw man, there, George. But let's give him his due: it's true that this is an example of McCain failing to engage in the "straight talk" which is supposedly (if you hyptnotize yourself to believe everything you read in the New York Times) his signature. Reality is, as Will says, that allowing mass reimportation of drugs from Canada will not end up saving consumers all that much money in the long run, a fact McCain seems loathe to mention. But that is not because of the reason Will gives. Look, Mr. Will, the pharmaceutical companies are big kids. They're capable of looking out for themselves. When the Canadian government places price restrictions on sales of their product in Canada, they have a choice whether or not to sell that product there. What they've been doing so far is complying with Canada's restrictions to the extent they can still make a profit and making up for the loss below projection by selling their stuff at higher prices here. What these restrictions amount to, really, is a price subsidy all wrapped up neatly in bows from the consumers of the USA to the consumers of Canada. Removing the reimportation restrictions is the free market thing to do. It forces the drug companies to put some teeth into their negotiations with the Canadian price czars, because those price czars will no longer be able to shield their caps from market competition (for the economically challenged reading this: yes, market competition can drive up prices too in the event that maintaining the current low price would result in a shortage, as would be the case for certain drugs in Canada if their reimportation were allowed). And now let's be realistic about what kind of effect this is all going to have on the market. There are about 30million Canadians and 10 times as many Americans. It's simply implausible that a market that is 1/10th the size of ours with a smaller range of available products is going to have all that much effect on how business is done here. Remember that drugs reimported from Canada mean shipping and delay markups. No - all reimportation is going to do is dry up the supply in Canada and force the price board up there to approve higher prices (and, hopefully, eventually shut down). In some twisted Democrat worldview, I suppose that's "mean" to Canada - but that's really their problem. They are free, after all, to scrap their single-payer system and let some market sanity back into the deal.

I have no particular objection to the rest of Will's column. Indeed, on a personal level McCain has long been my least favorite candidate in the race (though Huckabee is my actual overall least favorite) largely for the reasons Will mentions: his intolerance for dissent and the media myth that he's a "straight talker." "Maverick" is indeed "the media encomium reserved for Republicans who reject important Republican principles." (If it weren't, Ron Paul would rightly receive the same accolade, which of course he doesn't.) But I reject the idea that it's somehow the government's responsibility to enforce the pharmaceutical companies' regional pricing schemes. Private industries should not get this kind of government protection. If the drug companies decide to comply with Canada's fantasy pricing schemes, that's a decision they should take fiscal responsibility for. It is not the job of the American consumer to help Canada pretend it has a healthcare system.

There is, of course, one Republican candidate who "gets it" on this issue.

Pharmaceutical companies certainly own the drugs they produce, and they have every right to sell them at any price they choose. They also have the right not to sell their products to foreign pharmacies, or to condition sales on an agreement that such pharmacies will not reimport into the U.S. They do not have a right, however, to use government to prevent Americans from buying drugs from any willing seller they choose, regardless of where that seller may be located.

Those, of course, are the words of Ron Paul, doing some actual "straight-talking" on the issue.


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