Welcome to Cato Daily Podcast

Daily Podcast. It's Thursday, May 10th. I'm Anastasia Glova. Costs for patent drugs in the United States are very high,

but Americans are barred by law from going overseas

and purchasing their drugs there for less.

Now, a measure to lift that ban passed the Senate Monday, but was effectively defeated by a prior

vote requiring the administration to certify the safety and economic benefit of these re-imported

drugs.

Since the administration has said it cannot do that, the ban will remain in effect.

Cato's Vice President for Legal Affairs, Roger Polan, whose recent op-ed in the Wall Street Journal, addressed this very topic, helps explain

the nuances.

Americans today are prohibited from going overseas and purchasing cheaper drugs there.

Why did that happen?

Why is that?

Well that's a complex story and I'm going to lay it out for you.

It arises from the fact that the Food and Drug Administration has onerous requirements relating to drug safety and efficacy.

The result of which is that drug companies have to spend over $800 million on average and take over 15 years oftentimes to bring a new patent

drug to market.

Not surprisingly, they want to recoup those losses. But when they look to the market, they find that only in the United States is it free.

When they sell those drugs abroad to socialize medical systems, they find that they're up against price controls, and so they negotiate

agreements to sell the drugs at much lower prices.

The problem they're faced with then is what economists call parallel markets.

vendors there buying those drugs much more cheaply than they're available in the United States

...