November 4, 2003
What Are Those Numbers Again?... Let's take five with Moira Gunn. This is "Five Minutes".
After decades of success, big business may now find that globalization brings more trouble than not. The American commercial perception of this value proposition has always been to seek countries with cheap labor so it could make products with higher profits, and sometimes even pass a portion of the savings along to the American consumer. Some view this as akin to throwing the get-away-man a few extra twenties because the haul was better than expected. Nevertheless, while the concept was clear, the specific numbers was pretty much unknown.
Beyond cheap labor, the international space also offered new markets, and after running out of rich countries, the next challenge was to sell our products to the poor. Since the price of the product needed to be lowered to fit the local circumstance, companies looked at the total picture to see if it was worth it. If these foreign markets were profitable enough, who cared? Especially when the bottom line grew and the stock price went up.
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We American consumers are a savvy lot, and we aren't particularly surprised when a business manipulates a price. Buy something at a professional baseball game, an airport or a tourist haunt? It's major mark-up time. And where you happen to be in the country makes a difference, too - from the price of gas to the cost of a hotel room to the dinner check for a good steak.
But we also know how to get a really good deal, and today that frequently means we go to the Internet. Unfortunately for business, this may be exactly where the rock has started to meet the hard place: That old corporate game of "charge-what-you-can-where-you-can" may prove more and more difficult to pull off.
Here's a case in point: Did you know that the same prescription drugs we buy here are cheaper in Canada? That's right, the average price of prescription drugs in Canada is about half. You heard me: Half. Yet it's illegal to import these drugs from the very same manufacturers from Canada into the United States. Now, why would that be?
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The cynical answer has to do with passing laws intended to protect big business, yet the House of Representatives recently passed a proposal to import drugs from Canada for use under the Medicare program. Sure would save a lot of money, they reckoned. Sure would, we enthusiastically respond. But for some reason a majority of Senators disagree, as do the head of the Food and Drug Administration and - guess who? PhRMA, the drug industry's trade association.
We could talk about campaign contributions, but let's talk about the usual argument against drug imports. The premise is that the quality of these imported drugs cannot be controlled. Well, you and I both know the answer to that: Sure, they can. And certainly for less than half of what we are currently charged.
The issue is so glaring that more than one drug industry analyst has surmised that pharmaceutical companies might limit the amount of drugs they sell to Canada, just so there won't be enough product to sell back over the border. But we consumers are sharp: There are many countries in the world, and some of them have the very same drugs for even lower prices.
Now, I realize that this is an entrenched economic challenge, but through the power of the Internet, the world has become a "knowable place." We can, in an instant, find out what anything, anywhere costs.
Globalization has always meant world markets. Now it needs to mean world markets for everyone.
I'm Moira Gunn. This is Five Minutes.
