Remember the Hessians, the mercenaries from Germany that King George III hired to help put down the rebellion in the 13 colonies?
The king did not want to cause domestic political problems by sending English boys off to die in a distant, unpopular war. So he got his German relatives to do the dirty work.
King George’s resort to a proxy army is a good analogy for Minnesota Gov. Tim Pawlenty and U.S. Rep. Gil Gutknecht’s enthusiasm for retail imports of prescription drugs from Canada.
Both officials hail from the conservative wing of a political party that historically has expressed deep opposition to any interference by government in the free enterprise economy. Implementing Canadian-style negotiated drug prices would violate GOP principles. So, these modern Republicans want to enlist Canada as a drug-pricing mercenary to do the dirty work that they won’t do themselves.
Both speak favorably of the Canadian system and see it as a means of helping households that face high prescription costs. The governor, in particular, sees it as a way to mute state employee discontent over paying larger portions of their health care costs.
Neither official, however, seems willing to call for implementing Canada’s system in Minnesota or in the United States as a whole. Yet both are in excellent positions to do so.
As governor, Pawlenty has the right, indeed the responsibility, of proposing new measures to improve the well-being of Minnesota citizens. Such proposals are subject, of course, to legislative action, but part of the job of governor is to design policies or institutions to meet challenges such as those posed by rising drug spending.
Gutknecht certainly could introduce federal legislation establishing a Canadian-style government-negotiated drug price system of our own. Together with two other Republican representatives, he already has introduced a bill (H.R. 2427) that would legalize the importation or re-importation of drugs from other countries that have the seal of approval from the U.S. Food and Drug Administration.
But he must be sensitive to the charge that such imports from nations that intervene actively in drug markets contravene the conservative free-market principles he and his party espouse.
The Congressman’s Web site notes correctly, though somewhat irrelevantly, that: “Other countries do not have price controls. They set reimbursement rates.” Gutknecht does not explain why he thinks U.S. consumers should go through all the rigmarole of buying from other countries rather than simply replicating here in the United States the government reimbursement rate model that he admires in other countries.
Something is getting knee deep here, but it is not clear if it is fuzzy thinking, cynicism or political opportunism. Pawlenty and Gutknecht are not the only GOP members who have acquired a sudden aversion to free markets. Even Rep. Dan Burton, an old warhorse on the GOP’s right wing, is fulminating against drug companies using language reminiscent of Democratic populists Wright Patman and Huey Long.
You may object that I am unfairly focusing on Republican champions of drug imports from Canada. After all, liberal Democrats from Minnesota such as Sen. Mark Dayton and Attorney General Mike Hatch have hitched their political wagons to the Canadian import star. Indeed, Dayton was a lonely pioneer on the issue nearly four years ago.
The difference is that there is less hypocrisy on the Democratic side. That party has never made free markets a centerpiece of its philosophy the way the GOP has. Democrats don’t flail away at the evils of government interference in economic affairs the way Republicans do. Indeed, demonstrated contempt for market forces gives one a certain cachet among DFL stalwarts.
The phenomenon is truly a singular one. If Republicans such as Gutknecht, Pawlenty, Burton and others really believe that the pharmaceutical companies abuse the public with their pricing policies, why don’t they first try traditional Republican remedies such as anti-trust litigation?
Why go immediately to a measure that would devastate the business of small retail pharmacists across Minnesota? After all, there may be Republican voters and contributors in this group.
Why are economists like me excited about this phenomenon? First of all, the re-importation measures are inefficient. They expend more real resources, rather than fewer, in getting drugs from manufacturer to consumer. The only appeal of re-imports is to redistribute income — something Republicans abhor — from drug companies to consumers. If one wants to redistribute income, economists know that there are more effective and just ways to do it.
For me personally, the GOP’s sudden embrace of government price management by Canadian proxy is a disturbing indicator of how U.S. politics is sliding toward that which is common in Brazil, where few organized parties have sets of coherent principles. Instead, they are shifting coalitions of opportunistic populists. The inevitable outcome is demagogic public policies that impoverish society in the long run.
© 2003 Edward Lotterman
Chanarambie Consulting, Inc.