Reimportation ban should be lifted.

• Position: Pharmaceuticals

U.S. citizens pay far more than the rest of the world for American-made "miracle" drugs, yet laws prohibit buying those drugs abroad and reimporting them home. The ban should be lifted, contends a study by the Cato Institute, Washington, D.C., not to encourage reimportation but to allow incentives to surface that will force wider use of market practices worldwide. Free markets and competition, not price controls, ensure more and better drugs at lower prices, and a free market more adequately will distribute the huge research and development costs drug companies incur and pass on.

The reimportation ban shields drug companies from having to charge market prices to socialized medical systems abroad. Thus, the rest of the world rides free as Americans subsidize those systems--and that is politically unsustainable, as senior citizens and state and local officials have increasingly demonstrated.

With the ban lifted, drug companies still could try to maximize profits by segmenting markets and pricing differentially, but they would have to police those arrangements--not through an illegitimate statutory ban on reimportation but through no-resale contracts, limits on supplies, or export controls imposed by countries that bargain for lower prices, contends Roger Pilon, Cato's vice president for legal affairs, in "Drug Reimportation: The Free Market Solution."

If those measures proved inadequate for preserving such price discrimination schemes...