Importation of Canadian drugs

I think the U.S. drug industry is betting that the government will never allow Americans to import Canadian drugs.

I base this belief on a simple application of game theory. There are two possible cases: either the government will never allow imports, or it eventually will.

Start with the first case. If the government does not allow imports, then U.S. drug companies will continue to have a collective monopoly on the U.S. drug market and can continue to keep prices higher than import prices. Same as always.

But consider the second case. If the government eventually does allow imports, then U.S. drug companies will have to compete with import drugs, and thus will have to quickly reduce their prices in order to be competitive.

The second case would be a terrible situation for U.S. drug companies. If the drug companies honestly believed it might happen, then they'd do everything they could to prevent it. One effective way would be to reduce drug prices now, ostensibly to placate Americans, but really to quell the movement toward allowing imports. This would allow them to choose the lesser of two evils: having to charge lower prices for drugs but maintaining a collective monopoly, or having to charge lower prices because they're competing with imported drugs.

If this reasoning is correct, then the drug companies are predicting importation won't happen. Otherwise they'd begin lowering their prices now. Indeed, given the outcome of the presidential election, it seems that the prediction was correct.