California's Governor Does Not Understand Free Trade

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  • 01/06/2006

In yesterday’s State of the State speech, Governor Schwarzenegger made a remarkably ill-informed statement:

“I believe in the free market. I believe in free trade. I mean we buy food from overseas. We buy cars from overseas. Why not prescription drugs? So I call upon the federal government to permit the safe importation of prescription drugs. I say, let the free market work.”

The Governor is talking about the currently (and rightly) illegal piracy of low-priced drugs from countries like Canada into the United States.

Foreign drug makers are perfectly free to compete in the U.S under the same terms that govern American drug makers. Yesterday, I blogged about a medicine manufactured by a Japanese company and marketed by a Germany company in the U.S. They are investing a lot in selling their medicine in the U.S. In fact, they paid for a 5 sided advertising supplement in the latest issue of Forbes!

Foreign drug makers are just as opposed to the international piracy of prescription drugs as American ones are. Given his success in the movies, I’m surprised the Governor doesn’t understand this. If I picked up a few thousand black market videos of The Terminator on the sidewalk in Bangkok, without paying a royalty, and brought them back to the U.S., I’m sure he would agree that that was not free trade.

International piracy of prescription drugs will not reduce Californian drug prices. Failed programs in states like Minnesota and Illinois have demonstrated that. Instead, thre state needs legislation modeled on the unsuccessful Proposition 78 from last November’s election. A good discount prescription drug program ensures that drug makers have the incentive to supply medicines to low income people free of the threat of government harassment, which means abandoning destructive notions like international pharmaceutical piracy, which strips drug makers of property rights.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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