Outsourcing, Just a Question to Pose

Citizen JillUser Posted: Saturday, October 30, 2004 on More than just Mommy Message Board: Politics Isn't getting drugs from Canada actually outsourcing US pharmaceutical jobs?

Pharmisists, maybe, but the drugs in question are made here in the USA, and then shipped to Canada for ditribution to Canadians.

The uproar about Canadian drugs stems from the fact that drug companies are forced to sell the drugs at a lower cost in Canada. Those lower costs are available right over the border.

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...No, the cheaper Canadian drugs are the same ones sold at higher prices in the United States, and either exported or licensed for manufacture in Canada.

Why are they cheaper up north? Because Canada has a policy of controlling drug prices through its national health insurance system. As Deborah Stone, a health policy expert at Dartmouth, has observed, it's not the drugs we should be importing, it's the policy.

That's an over-simplification.

Canada doesn't allow for advertising of prescription drugs. The United States does (we have that whole freedom of speech thing here). The millions spent in marketing is then passed on to American consumers in the form of higher prices.

However, if Americans started buying their drugs from Canada in sufficient quantity, the price in Canada would go up. Canadians would then demand their government now allow drugs to be exported to the United States.

The whole buying drugs from Canada thing is a canard. A joke that anyone who's remotely familiar with the issue beyond talking points knows can't happen.

 

I should also point out, since I think this was Jill's point, is that the money that the AMERICAN drug companies makes goes somewhere - to pay the salaries of Americans. So she is right, even if Canada did allow Americans to buy massive quantities of drugs from Canada at the prices they are today, that loss of revenue is going to have to come from somewhere.

It's not magic. It's going to be people losing their jobs. Or maybe they'd find a way to outsource those jobs to India or something and the Democrats could then complain about more outsourcing even though its Democratic policies that cause the bulk of outsourcing in the first place.

Reply #2 By: Moderator Draginol - 10/30/2004 5:11:55 PM That's an over-simplification. Canada doesn't allow for advertising of prescription drugs. The United States does (we have that whole freedom of speech thing here). The millions spent in marketing is then passed on to American consumers in the form of higher prices.

Tell that to Segrams & Marlboro.

However, if Americans started buying their drugs from Canada in sufficient quantity, the price in Canada would go up. Canadians would then demand their government now allow drugs to be exported to the United States.

How and why? Explain this, please. The cost of the drugs are fixed by the Canadian Government. They cannot go up. In america all the drugs going unsold would cause a surplus that would be channeled to Canada to meet the increased demand.

Frankly the oversipmlification is yours, not Deborah Stone's, a health policy expert. The loss of revenues to the drug companys would be a good thing. I know a drug rep personally and he gets paid to GOLF 4 times a week with doctors. Perhaps the word junket isn't in your extensive vocabulary, but it should be. The fact remains the majority of jobs at a drug company are not manufacturing jobs because the process is highly mechanized and automated. Most are support jobs, advertising, researchers and chemists. They will not be making less drugs, they just won't be able to advertise as heavily. Which is a total waste... when was the last time you suggested a drug you'd like to take to your doctor? If your sick you have a handful of options available to you, and you take the one that works best, or has the least amount of side effects, or the one your prescription drug plan covers the best, not the one with the best commercial.

You went on to say

even if Canada did allow Americans to buy massive quantities of drugs from Canada

Canada does allow it, it is illegal because GWB thinks it's highly probable that the Canadaian Pharmisists would switch the drugs on the American consumers or that the drug company is using it's money to buy Congress, and the President. Feel free to accept which ever excuse for the bill not passing that is most palatable for you.. Canada Buys Massive amounts of drugs in lots from drug comanies, buying in bulk is one of the ways they lowers the cost for their consumers. This was proposed for medicare, and the republican congress voted it down.

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So maybe you’d think that Medicare -- representing all the nation’s seniors -- would use its mammoth buying power to get even bigger drug discounts for them. But you’d be wrong. The new Medicare drug bill prohibits Medicare from negotiating deals with drug companies. The pharmaceutical industry used its clout with the Republicans in Congress who designed the bill to prevent such bargaining.

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And one more thing I'd like to add - I'm not a Democrat. I'm a Patriot, and proud of it.

Cappy - it's basic economics.

Canada can demand that drugs cost a nickel if they want but the drug companies don't have to agree to that price.  What Canada does is NEGOTIATE a fixed price on the drugs with teh drug companies.

IF millions of Americans began importing their drugs from Canada, the drug companies would need to make up the difference and that difference would be to charge Canada more for those drugs.  But the Canadian government won't let that happen. Mark my words, if this import drugs from Canada starts becoming a serious consideration the Canadian government will make it illegal to export drugs to the United States.

You make that sound like ther is one drug company, however in business there is something called competition. Some drug companies would undoubtedly reorganize themselves to take full advantage of the new Canadian demand. If the drug companies were nto afraid of this possiblity why would they have mobilized themselves against the possiility and have spent 8.5 Million to repel it.

This doesn't even include campaign contiributions.

Excerpt:
The pharmaceutical industry's trade group spent $8.5 million in lobbying this year as it worked against a bill to allow importation of government-approved drugs.

This article refutes your claim of "canard" quite effectively Link

Here's another Excerpt:
PhRMA argues that the lost revenue would stifle its research into new drug treatments, ultimately hurting patients. It also warns that people buying imported drugs risk using counterfeit or tampered products, despite a requirement in the importation bill that drugs be shipped in anti-tampering and anti-counterfeiting packaging.

These are almost the exact words uttered by GWB in the debates. And you don't think he's in their pockets?

GWB points to his Medicare Prescription Drug Card as a winfall for Seniors yet:

The Bush administration has promised the new Medicare drug discount card program will save all seniors money on their medicines. Yet, according to the Boston Globe, the White House allowed drug card industry CEO David Halbert (a longtime Bush campaign contributor) to be involved in the original crafting of the discount card program. The result is a program that enriches drug card companies at the expense of consumers. The cards do not guarantee any price savings for consumers, allowing drug card companies to change their "discounts" at any time in order to maximize profits.

Now, as the program is set to start, the White House has once again looked to its top campaign contributors in deciding which companies it approved to administer the cards. All told, the 73 companies selected gave President Bush and conservatives in Congress more than $5 million since 2000. Of those 73 companies approved by the administration, 20 (almost one third) have been involved in fraud charges. Those 20 companies made more than 60% of the total contributions to Bush and conservatives by drug card companies, calling into question whether the administration overlooked those companies' records because of their financial ties to the Bush Campaign.



COMPANIES GAVE MORE THAN $5 MILLION TO BUSH/CONSERVATIVES: The 73 health care companies approved to administer the Medicare drug discount card programs gave President Bush and conservatives in Congress a total of more than $5 million in hard money, soft money, and PAC contributions.

Seven health industry executives whose companies were approved for the drug card program have raised or pledged to raise $100,000 or more for the Bush Campaign. Three of those these "Pioneers" linked to companies that have been involved in fraud charges, yet were still approved for the drug card program.

I know a drug rep personally and he gets paid to GOLF 4 times a week with doctors.

You should whistleblow on your buddy, unless the docs are paying their own way. If they are, you have no complaint and should be applying for one of those jobs, unless golf is not your thing.

I always have to laugh about the money/contributions thing - each side gets gobs of money from sources that may or may not benefit from a given candidate's election, and more often than not both are getting money from the same sources to varying degrees.

So trying to tar one party with accusations like this is pointless.

And back to the point, I agree that outsourcing is a bogeyman with far more complex causes than who sits in the White House, and a relatively small economic issue. After all, it really began to pick up steam during Clinton's term, when everything was perfect and all was right with the world. It doesn't matter whether you lose your job due to the tech bubble bursting or your company finding less expensive labor & associated overhead overseas, you've still lost your job and you have to regroup. A strong argument can be made that the outsourcing phenomenon is an inevitable consequence of the ever-tightening regulator noose that has been wrapped around companies and jacked up their costs, every from EEOC to OSHA to ADA, you name it.

Cheers,
Daiwa

Cheers,
Daiwa

Reply #3 By: Draginol - 10/30/2004 5:14:09 PM I should also point out, since I think this was Jill's point, is that the money that the AMERICAN drug companies makes goes somewhere - to pay the salaries of Americans. So she is right, even if Canada did allow Americans to buy massive quantities of drugs from Canada at the prices they are today, that loss of revenue is going to have to come from somewhere.

That is indeed partly my point.  Daiwa got another part that outsourcing is a "bogeyman with far more complex causes than who sits in the White House".

I wanted to open a dialogue about it to point out that people often don't think too deeply about it.  How many people know that we manufacture the drugs, export them then pay more for the same thing here than they do in Canada?  If they do know, do they ask themselves why?  I know many people who just see that they are cheaper in Canada so getting them from Canada is a nice solution.

I also find it interesting how liberals are often speaking the praises of "global society" out of one side of their face while damning outsourcing.  Those same liberals want to regulate the hell out of everything then complain because they lost their job because their plant couldn't afford to pay them to make stuff that they could get a lot cheaper from a less regulated country.  And about that global society, some jobs are outsourced because noone else in the area fits the bill.  If a software company finds a brainiac programmer in Poland, why hire some lesser programmer and probably have to pay more due to benefit costs to get less results?

Americans need to buckle down and remember what competition is really like.  We now live in a society bent on telling our children we are all winners and don't even keep score.  We have unions where people do the absolute minimum they have to do in order to keep their job and they still get paid very competitive wages.  We are all caught up in being fair and making excuses.  Sometimes people just need a swift kick in the pants to realize you have to work and stay on top of your game to actually be a winner.  Just being an American shouldn't mean you get a free pass to everything everyone else has.  America is free which means you are free to succeed if you work at it and free to fail if you don't.  Replacing competition with entitlements is what is ruining us as a society.

That's an over-simplification. Canada doesn't allow for advertising of prescription drugs. The United States does (we have that whole freedom of speech thing here). The millions spent in marketing is then passed on to American consumers in the form of higher prices.

It's funny how the left and right can look at things just exactly opposite. You are defending "freedom of speech" for companies, the cost of which is then passed on to consumers. You apparently see no problem in the consumers being forced to subsidize the cost of that speech, by preventing their buying elsewhere.

I suspect that, if it were private citizens' "freedom of speech" the right would be reminding us that we have no freedom of speech, only a right to have congress refrain from passing laws limiting speech -- and that, if corportations or the business world tended to stifle speech, that that was entirely permissible.

Congress is really the problem, along with the immutable law of unintended consequences.

Over the past 16-18 years my industry has seen an incredible proliferation of unfunded regulatory mandates that have driven my overhead from about 50% to nearly 70% of gross revenue and had the effect of denying access to previously-available revenue streams. That's partly due, also, to the fact that my industry has price controls which have prohibited me from passing along any of the cost increases and forced me to continually work harder to make less. If it were possible for me to save money by outsourcing, I would, but it's not an option.

Unless we figure out a way to either deregulate or permit cost pass-throughs, the problem will only continue to get worse. It's a rare regulation that Congress doesn't love.

Cheers,
Daiwa

You are defending "freedom of speech" for companies, the cost of which is then passed on to consumers.

An awfully big industry (advertising and all the dominoes further down the chain) would be out of work quick if that "freedom of speech" were denied. Nothing's ever as simple as it seems.

Cheers,
Daiwa

Isn't getting drugs from Canada actually outsourcing US pharmaceutical jobs?

You are (playfully, I think) confusing two related but separate issues:

1) Freedom of consumers to buy either American or foreign products, and
2) Freedom of corporations to hire either American or foreign workers.

These are linked concepts, but #1 is horribly muddied by the international nature of business. The product development, resource gathering, manufacturing, and retailing of any given item is nowadays so mixed up, that most of us have forgotten the "buy American made" ideal. Too often, the American car represents fewer American jobs than the foreign made car -- although I suspect that if the product by product information were available, a lot of people would get on board.

The more salient difference, though, is the force exerted by government. Are we subsidizing the activity? Allowing the activity? Taxing the activity? Or forbidding the activity?

It is important that our government subsidize neither of these activities. At present we subsidize #1 (freedom of corportations, and, in the case of prescription drugs, prohibit #2 (freedom of consumers). If that is the policy you want to vote for, that's fine, but it is going to require a lot of obfustication to get the public in general to support it.

You are defending "freedom of speech" for companies, the cost of which is then passed on to consumers. An awfully big industry (advertising and all the dominoes further down the chain) would be out of work quick if that "freedom of speech" were denied. Nothing's ever as simple as it seems. Cheers, Daiwa

A bit out of context. I said:

You are defending "freedom of speech" for companies, the cost of which is then passed on to consumers. You apparently see no problem in the consumers being forced to subsidize the cost of that speech, by preventing their buying elsewhere.

The world is full of complications, but things are not yet so complicated that we need to pass laws to require consumers to buy advertised products, just so advertisers can stay in business.... Other absurdities aside, the advertising business is not currently having such a tough time that they need legislative assistance of this sort.

See what happens when government gets too deep into micromanaging healthcare? The nightmare only gets worse the more we try to "fix" it.

Cheers,
Daiwa

1) Freedom of consumers to buy either American or foreign products

It's not that straight forward though is it?  It isn't a Canadian product since we are producing it, exporting it then we would be buying it back.  Does that make any sense?  If we want to retain our rights for freedom of speech and free commerce, why shouldn't we be willing to pay for it?

If we stop buying our drugs in the US, what will that do to drug companies here?  What will it mean for Canadian drug companies?  How will it affect prescription coverage for medical insurance? 

It's not that straight forward though is it? It isn't a Canadian product since we are producing it, exporting it then we would be buying it back. Does that make any sense?

Since when does government or anyone else have to deem an economic decision "rational" to make it legal? It is a very strange argument for even a moderately free market person to make.

If we want to retain our rights for freedom of speech and free commerce, why shouldn't we be willing to pay for it?

So you are seriously arguing that I have to pay cash for someone else's free speech and commerce? I doubt that Phizer will support any laws that send their money to me so that I can advertise my point of view.

Sorry, but I'm just not buying this argument at all. There may be arguments for prohibiting imports of prescription drugs from Canada, but subversion of advertising just won't fly with this guy... Next thing you know, you will want an extra tax on generic products because they aren't properly paying for advertising either.

Okay, obviously I am not getting a key point across here.  Individuals want the right to buy products from the most competitive source be it domestic or otherwise.  Why shouldn't companies have that same right when shopping for employees?

Okay, obviously I am not getting a key point across here. Individuals want the right to buy products from the most competitive source be it domestic or otherwise. Why shouldn't companies have that same right when shopping for employees?

Because the playing field is not level. We are talking about non free market countries, that have an adjusted income of anywhere from $350 to $4000 a year. We can not live on that here, but they can there. I'm serious about this and so are economists all over the country. We need to stop this now before it is too late. I'm not a doomsayer by nature, but the effects of outsourcing will stager the great depression. Business leaders care about one thing, making money, not the welfare of the American worker, not the breadlines, not the poor and down trodden. That's not there concern. Their job is to make as much money for their company as they can within the rules. The government sets those rules. So, the question is what shouuld the rules be. The answer is NOT Simple. American Companies need to be competitive on the world market. But we can not forsake the american worker to do that.

We need to balance trade, AND put hard limits on outsourcing, tax companies that out source to maintain the tax base. Give tax breaks for jobs created in the states. We need to make sure that the countries getting our jobs have open trade with us, and purchase a good deal more of the products they produce for us.



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Remember these two facts when thinking about outsourcing:

When companies started talking about NAFTA and Other foreign trade agreements they were talking about moving low paying jobs, overseas, and re-educating the American workers to move into higher paying jobs. The problem is that those higher paying jobs are now being offshored too. We are talking about the programmers, Analysts, Software Developers, Accountants: Mechanical, Electrical, and Civil Engineers, Research & Development, Lawyers. Anything we can do here can be done somewhere else cheaper. ANYTHING. Why because those countries do not have as high of a standard of living. They have Socialized Medicine; they have much lower housing costs. They don’t by 52 inch Wide Screen High Def TVs. They don’t buy 2 or 3 PCs for the house. They don’t buy $300 Cell phones, gourmet ketchup, designer Jeans. They don’t have 3 cars, 2 homes, or 4 TVs. Disposable income is what drives this economy. High paying jobs, and overtime are they key. Put Americans to work and they spend like crazy. An Indian worker making $12 dollars a day does not have the spending power of an American Worker making $12 an hour.

The average salary of the American worker who lost their job and re-entered the work place was 16% lower than before they lost their job. 7.3 Million American workers now hold more than one job that’s 5% of the work force. The Consumer Price Index rose 2.4% in the last year. The lower cost of production is not being passed on to the consumer. It’s going to high level executives, and golden parachutes. So I ask: where is the upside for the American worker? If we want to compete we need to LOWER the cost of living. I don’t know of anyway to do that, not with out destroying the free market system. When the High Tech and high wage jobs we were supposed to migrate to get outsourced what are we to turn to? Protectionism isn’t a dirty word, it’s just good economics.