Prohibiting Gray Market Prescription Drugs: The Ethical Dimensions

I. INTRODUCTIONThis paper deals with the ethical implications of the gray market for prescription drugs in the United States. It focuses on attempts by people and states to reduce the high cost of domestic prescription drugs by importing or re-importing drugs from countries such as Canada, Mexico, and China, and attempts by the government and drug companies to limit or prohibit such practices.on average, brand-name drug prices are approximately seventy-percent higher in the United States than elsewhere. U.S. consumers would have saved an estimated $59.7 billion during 2004 had they purchased all brandname drugs at Canadian prices. For instance, in Beebe Plains, Vermont, there is a street, 'appropriately named Canusa Avenue,' that runs along the U.S.Canada border. The difference in what residents of opposite sides of the street pay for the same prescription drugs is considerable. Residents of the northern side of the avenue can purchase a ninety-day supply of Lipitor (atorvastatin) for $170, for example, while residents of the southern side of the street must pay $330 to fill the same prescription. 1This situation is complex, emotional, and multi-faceted, and it affects and is effected by numerous parties and principles. it has been in a long period of stasis, where politics trumps law, making this an ideal opportunity to apply the filter of ethical reasoning and analysis. Additionally, it is the kind of visceral real world issue that can be used as an ideal exercise to teach the various types of potential ethical approaches and how they can result in contradictory conclusions.II. The Gray Market DebateGray marketing, also known as parallel importation, occurs when genuine and legitimately manufactured trademarked products intended for a particular country market are diverted to a different country market through unauthorized distribution channels.2 The predominant reason for gray markets to exist is price differentials across international markets.3 Distributors in lower-priced markets often divert products to middlemen in higher-priced markets, who subsequently offer these products to their customers at substantial discounts compared to authorized intermediaries in these markets.4 Gray markets have existed in a number of product markets, including automobiles, textbooks, and The Food and Drug Administration (FDA) has been active in combatting the re-importation of prescription Recently, the State of Maine has defied the FDA and has been defeated in the trial court over its practice of re-importation of drugs to reduce its health care obligations.5Gray markets employ irregular but not illegal methods . . .: a market that legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.6 The practice of reimporting to the United States prescription drugs that were manufactured in the United States and then exported for sale in another country is referred to as drug re-importation.7 In 1988, Congress enacted a special restriction on importation of goods returned.8 That restriction prohibits any person other than the original manufacturer to import into the United States a prescription drug that was originally manufactured in the United States and sent abroad.9 Congress specifically found that this restriction was necessary to protect the health and safety of the American public because [l]arge amounts of drugs are being reimported into the United States as American goods returned. These imports are a health and safety risk to American consumers because they may have become sub-potent or adulterated during foreign handling and shipping.10A.The Price ProblemFor people without insurance, prescription drugs often are less expensive outside the U.S. The reason is simple: the U.S. is the only country where there are no price controls over prescription drugs. 11 Americans spend close to $1,000 per person, which is almost forty-percent more than the next highest country's average. …

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