Harrington's Sort & Cull
Urban C. Lehner Editor Emeritus

Friday 01/03/14

A Proposal to Tax Animal Antibiotics

Like many public debates, the controversy over the use of antibiotics in animal agriculture often resembles a broken record. Again and again we hear the same old arguments. So on the rare occasion when someone says something new, as two Canadian economists did recently in the New England Journal of Medicine (http://tiny.cc/…), they merit a hearing.

In giving them that hearing, livestock producers should understand that the authors, Zaidan Hollis and Ziana Ahmed, believe antibiotic use for animals must be slashed. What's new in their argument is how they would accomplish the reduction. Rather than banning or regulating, they propose taxing -- imposing a "user fee" on animal antibiotics. Pharmaceutical companies would pay the fee and pass it on to producers in higher prices for animal antibiotics.

The authors -- they're economists, remember -- argue a user fee is an economically rational solution with several advantages. First, they say, it would be easier to administer.

Second, it would "allow the farmer or veterinarian to decide whether the antibiotic confers enough benefits to make it worth the higher price, rather than relying on the intrusive, indiscriminate hand of government." The higher price, the authors predict, would discourage "low-value uses" while allowing high-value ones.

Third, the fee would create revenue that could be used for research on new antibiotics, education against overuse of antibiotics and other efforts to replenish the pool of effective antibiotics.

U.S. livestock producers will likely be unenthused. Antibiotics aren't cheap as it is. And our cost competitiveness in international markets would be hurt if the U.S. were the only country to collect a user fee.

On the latter point, the authors argue for an international user-fee treaty. The fourth advantage of a user fee, they argue, is it would encourage the development of an international standard. Governments would be more likely to sign a treaty calling for a user fee because they'd find the prospect of additional revenue more enticing than the prospect of additional regulations to enforce.

In a recent blog (http://tiny.cc/…) I wondered how it could be that pharmaceutical manufacturers say they'll comply with FDA's new voluntary guidelines but don't think sales will be affected. If the drug companies are right and the guidelines will have little effect, producers would no doubt prefer the new guidelines to a user fee.

But there is also a bill before Congress that would ban the use of antibiotics except in animals that are actually sick or in close contact with infected animals. Compared to that, producers might find a user fee preferable. Everything, after all, is compared to what.

Urban Lehner can be reached at urbanity@hotmail.com


Posted at 12:46PM CST 01/03/14 by Urban C Lehner
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