IPI Ideas

If ever a market or an industry has undergone a revolution in ten years time, it is telecommunications. If ever a legislature should consider dramatically deregulating an industry, this is the time in telecommuncations. As the states have opportunity to revisit the missions of their respective Public Utility Commissions, they should seriously consider restricting the ability of the Commissions to regulate telecommunications.

Thanks to Sen. Lamar Alexander and a group of former Governors in the Senate, the states now have power to tax your access to the Internet. Sen. Alexander’s blocking move prevented the Senate from extending the Internet Tax Moratorium that has been standard public policy under both the Clinton and Bush administrations.

By asserting state primacy over telecommunications policy and e-commerce, Alexander and his allies are substituting their own twisted constitutional construction for the wisdom of the Founders.

A conservative, Republican governor in Alabama is championing a massive new tax-and-spend scheme, replete with class warfare rhetoric and hidden taxes. This represents a complete departure from the tax cuts and fiscal discipline that have been a hallmark of conservative philosophy and Republican aspirations for decades.

In the debate of legalizing the reimportation of prescription drugs into the U.S., some advocates claim that reimportation is a free trade issue, and that attempts to prevent reimportation are barriers against free trade. But manufacturers of such goods must preserve their ability to price discriminate, according to Dr. Richard Epstein. Price discrimination allows the "low demanders" to participate in the market. The result of large scale reimportation would be to restrict needed sales of drugs overseas, and would sap the incentive to innovate new products. Imposing statutory restrictions on reimportation is an effective substitute for a valid, if ineffective, contractual restraint on alienation that makes sense in light of the basic domestic decision to grant the full patent monopoly.

The issue is safety. Twice the Secretaries of Health and Human Services have been unable to determine that U.S. consumers would be safe with large-scale prescription drug reimportation. Reasons for opposing prescription drug reimportation include: 1) U.S. Government agencies recognize the danger of illegal imports, 2) drug counterfeiting is rampant outside the U.S., 3) Canada isn't safe either, 4) it's all authorities can do to monitor the safety of drugs within the U.S., much less worrying about drugs from overseas, and 5) trial lawyers will sue pharmaceutical manufacturers for not ensuring the safety of their products, even when they have no control over them.

Proponents claim that legalizing prescription drug reimportation from overseas countries will lower the cost of drugs to U.S. consumers, and some proponents claim that allowing reimportation is a "free trade" issue. But reimportation is a Trojan Horse for importing the deficient regulatory regimes of foreign countries, rather than importing their prices.

Texas has an education problem, not just an education-funding problem. The current “Robin Hood” school finance system is but one fact of Texas’ education problem.

Americans are increasingly buying U.S.-made prescription drugs from Canada and other countries and bringing (i.e., reimporting) them back to the U.S. However, reimporting these drugs is breaking U.S. law. Should drug companies continue to sell to vendors who knowingly break the law and may put patients at risk? Reimportation is creating several ethical dilemmas for prescription drug manufacturers.

Driven by an insatiable appetite for tax revenue, states are attempting to impose “business activity taxes” on businesses that have no clearly-defined presence within the state. A clear, legal definition of nexus is needed so that businesses can understand when and where they can expect to be taxed. Such a definition is a legitimate role for the federal government in facilitating interstate commerce, and not a violation of federalism.

Of all the recent criticisms leveled at the prescription drug industry, the one that has resonated most is that drug companies are gaming the patent system. However, the Hatch-Waxman Act that governs the role between generics and brand name drugs is very complicated, and it has ultimately weakened intellectual property protections. It is naive to assume that branded companies are sidestepping the rules while generics always play fair.