Curtis Harris
Theft is theft
By Curtis Harris
The media coverage of Canadian drug prices and the efforts of American individuals, companies and states to buy from Canada to take advantage of those prices is missing two basic, but important, points. I will illustrate by example.
Let's suppose my friend owns a used car business in Duluth, MN. He specializes in purchasing luxury and near-luxury SUVs at the end of their leases from his nation-wide contacts in the business. He brings these vehicles to Duluth, services and reconditions them as necessary, and then sells them at an appropriate mark-up. His customers appreciate the value, luxury and utility of the vehicles he sells. His profits reflect his ability to do good deals when purchasing the SUVs, the additional investment he makes in their reconditioning, and his financial risk in carrying the inventory.
He has one problem. There is a gang of sophisticated car thieves operating out of Thunder Bay, Canada. Every few months, they visit his car lot in Duluth. They select several SUVs on his lot and offer to buy them at prices well below his costs of doing business. If he refuses to sell at those prices, they will return on some night in the future and steal those cars. They will have the SUVs across the border before he knows they are gone. To avoid a total loss on those SUVs, he must sell them below cost. The realities of business force him to increase prices to his Minnesota customers to cover the losses. The thieves smuggle the SUVs into Canada and make money selling them at prices lower than he charges in Duluth.
Adding insult to injury, he sees some of the stolen SUVs back on the streets of Duluth. Some of his fellow citizens heard about the Canadian thieves' scheme. They went to Thunder Bay, bought the SUVs at low prices, and brought them home. They are also thieves — by virtue of their knowing purchase of stolen property.
The end-result of this criminal activity is that my friend doubts the long-term viability of his SUV business.
American pharmaceutical companies share my friend's problem. They invest substantial amounts of time and money into the creation of life-saving drugs. They pass these drugs through extensive testing and government regulatory processes before selling them to customers. They also have the after-sale risk of huge lawsuits from the out-of-control American legal system if there is so much as the hint of a problematic effect from a drug's use in a tiny number of cases. Consequently, the drugs they produce are expensive.
The sophisticated drug thieves from the Canadian government offer the American pharmaceutical companies deals that they cannot refuse. Either the drug companies must sell to the Canadian government at prices well below their costs, or they face the likelihood that the Canadians will violate patent laws by producing copies of the drugs in Canada. Europe, by the way, is a co-conspirator in this theft. The American drug companies sell their products below cost to avoid completely losing their markets to copy cat drugs. They increase their prices to their American customers to cover the loss.
Because of the Canadian theft, Americans can find drugs in Canada at prices lower than they pay in the United States. Some American individuals, company health plans, and state governments want to buy drugs in Canada at Canadian prices. They pretend they want to do nothing more than switch from Wal-Mart to K-Mart to get a better price on toothpaste. In reality, of course, they are knowingly receiving stolen property.
The theft by Americans will further reduce the pharmaceutical companies' ability to make an appropriate return-on-investment. They will reduce research and development activity. Small pharmaceutical companies will leave the business. There will be no innovative new companies founded to advance the industry. Investment dollars and talented people will go elsewhere. The health of all Americans will suffer.
It is disturbing to know that many foreign governments steal from American companies, and therefore steal from individual American citizens. It is more disturbing to find Americans willing to join in the theft to mask the real problems in our health-care system.
By the way, does anyone know how I can get on a do-not-call list that covers the entire nation of India?
© Curtis Harris
The media coverage of Canadian drug prices and the efforts of American individuals, companies and states to buy from Canada to take advantage of those prices is missing two basic, but important, points. I will illustrate by example.
Let's suppose my friend owns a used car business in Duluth, MN. He specializes in purchasing luxury and near-luxury SUVs at the end of their leases from his nation-wide contacts in the business. He brings these vehicles to Duluth, services and reconditions them as necessary, and then sells them at an appropriate mark-up. His customers appreciate the value, luxury and utility of the vehicles he sells. His profits reflect his ability to do good deals when purchasing the SUVs, the additional investment he makes in their reconditioning, and his financial risk in carrying the inventory.
He has one problem. There is a gang of sophisticated car thieves operating out of Thunder Bay, Canada. Every few months, they visit his car lot in Duluth. They select several SUVs on his lot and offer to buy them at prices well below his costs of doing business. If he refuses to sell at those prices, they will return on some night in the future and steal those cars. They will have the SUVs across the border before he knows they are gone. To avoid a total loss on those SUVs, he must sell them below cost. The realities of business force him to increase prices to his Minnesota customers to cover the losses. The thieves smuggle the SUVs into Canada and make money selling them at prices lower than he charges in Duluth.
Adding insult to injury, he sees some of the stolen SUVs back on the streets of Duluth. Some of his fellow citizens heard about the Canadian thieves' scheme. They went to Thunder Bay, bought the SUVs at low prices, and brought them home. They are also thieves — by virtue of their knowing purchase of stolen property.
The end-result of this criminal activity is that my friend doubts the long-term viability of his SUV business.
American pharmaceutical companies share my friend's problem. They invest substantial amounts of time and money into the creation of life-saving drugs. They pass these drugs through extensive testing and government regulatory processes before selling them to customers. They also have the after-sale risk of huge lawsuits from the out-of-control American legal system if there is so much as the hint of a problematic effect from a drug's use in a tiny number of cases. Consequently, the drugs they produce are expensive.
The sophisticated drug thieves from the Canadian government offer the American pharmaceutical companies deals that they cannot refuse. Either the drug companies must sell to the Canadian government at prices well below their costs, or they face the likelihood that the Canadians will violate patent laws by producing copies of the drugs in Canada. Europe, by the way, is a co-conspirator in this theft. The American drug companies sell their products below cost to avoid completely losing their markets to copy cat drugs. They increase their prices to their American customers to cover the loss.
Because of the Canadian theft, Americans can find drugs in Canada at prices lower than they pay in the United States. Some American individuals, company health plans, and state governments want to buy drugs in Canada at Canadian prices. They pretend they want to do nothing more than switch from Wal-Mart to K-Mart to get a better price on toothpaste. In reality, of course, they are knowingly receiving stolen property.
The theft by Americans will further reduce the pharmaceutical companies' ability to make an appropriate return-on-investment. They will reduce research and development activity. Small pharmaceutical companies will leave the business. There will be no innovative new companies founded to advance the industry. Investment dollars and talented people will go elsewhere. The health of all Americans will suffer.
It is disturbing to know that many foreign governments steal from American companies, and therefore steal from individual American citizens. It is more disturbing to find Americans willing to join in the theft to mask the real problems in our health-care system.
By the way, does anyone know how I can get on a do-not-call list that covers the entire nation of India?
© Curtis Harris
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