2003 August 23 Saturday
Richard Epstein On Legal Actions Against Third Parties And Drug Reimportation

Responding to an earlier critique of his argument against drug reimportation by Cato President Edward H. Crane and VP for legal affairs Roger Pilon legal thinker Richard Epstein defends the legal basis for preventing reimportation by illustrating a basic technique used to get legal remedies.

Last step. Why is it so strange to see the United States getting involved? Here the law is filled with all sorts of cases where actions are allowed against third parties because the direct remedy is blocked for some reason. Here is one case: A induces B to break his contract with C. No question that C has an action against B, but there is also no question that C has an action against the inducer, A, as well, for the loss of the arrangement. And why is that so valuable? Well, B may be insolvent, or outside the jurisdiction. Or there may be many Bs who are too numerous to sue, but only one A who has orchestrated the breach, and so on. It is for this reason that we allow owners to sue not only thieves but also the people to whom these goods are sold in some secondary market. If it is possible to kill off the resales, then the original theft or violation of trust is that much less likely to occur.

Ideally, we would like to see the local governments enforce or respect their obligations, but if they choose to violate their contracts with their own sellers, then the sellers could sue the third parties to stop the resale, which is all that happens when the sales back home are enjoined. There is nothing odd about saying that third parties, Americans all, cannot receive goods that they obtain in violation of a prior contract. It happens all the time.

This seems like a pretty good rebutting of Crane and Pilon's argument.

James Pinkerton also weighs in and points out that when government regulations discourage some form of investment the loss usually goes unnoticed by most people.

But now comes the crunch -- and it's biting down, even now, on potential treatments and cures. Advocates of an NHS for America are scarce, but advocates of expanding the government's role in health care are abundant. For a long time now, both federal and state governments have been muscling down drug prices. The argument is always the same: drugs cost too much, so make them cheaper. There's no way to know how much past government action has served to restrain drug R&D; that's one of the problems of government regulation. What's never seen is what never was created.

This is an important point with regard to drug prices and drug development. If the US lets in price-controlled drug imports and the pharmaceutical industry responds by reducing spending on new drug development it is not likely that either the American or European publics will be sufficiently upset by the reduction in new drug development spending to demand that the causes be fixed.

Share |      By Randall Parker at 2003 August 23 09:45 PM  Socialism, Capitalism


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