Drug Importation Bill Set for Hearing

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, March 5, 2004 Share this on FacebookTweet thisEmail this to a friend

CMTA opposes SB 1144 (John Burton, D-San Francisco) to allow Department of General Services to purchase drugs from Canada where drug prices are controlled by the state-run health care system. Not only does this proposal violate federal law and pose health and safety concerns, it could also seriously harm California's economy.

California is home to the largest biotech cluster in the world, performing most of the world’s R&D and attracting vast amounts of private investment capital. The biotech industry is predicted to be the source of the next wave of innovation and economic growth in the US. Like aerospace in the 60’s and computer development in the 80’s, biotech R&D and manufacturing is poised to boom in California in this decade.

High wage manufacturing jobs, increased state and local tax revenues, and maintaining the flow of investment capital for continued innovations in biotech should be our overarching goals. For some large and small companies, the long lead time and very expensive process of drug development is nearly over. They are now entering “phase III” in the production cycle, looking for locations to site manufacturing facilities. In the next decade, all Californians should be working together to ensure that California is the first choice for such facilities and that investment capital will be attracted to the biotech industry.

This bill works against that goal. SB 1144 is simply a back-door method of embracing in California the Canadian system of price controls on drugs. Limiting the rewards of investment through price controls will dry up investment capital and innovators will not be funded. New drugs and treatments that could be safer, more effective, and even less expensive will not be developed. Investment capital will not continue to flow to a system that does not reward the risk of loss, which in the case of pharmaceuticals is extremely high.

Under this scheme Californians lose in two ways – access to new drugs will be delayed or foregone, and our economy will not enjoy the fruits of new biotech investment.

Drug prices in the US are higher than they should be because other countries such as Canada are not paying their fair share of R&D costs. However, the problem of “free-ridership” should be addressed head-on at the federal level, not in California through this bill.
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