Recently pain relievers have been under fire for increasing the risk of heart attacks. First Vioxx was pulled from the market. Then Pfizer's Celebrex came under fire. Pfizer has since pulled advertising for the drug. A day or two later, over the counter pain medicine, Aleve, was said to carry an increased risk as well.

What is happening with these drugs is a good example of why drug companies charge so much. They spend millions of dollars on research to develop drugs that improve our lifestyle or delay the inevitable. Their reward for all that research and development is the sale of successful drugs. The enormous risk they face is producing drugs that are ineffective or even worse will expose the company to litigation.

One of the largests costs associated with bringing drugs to market is getting FDA approval. Government intervention is costly, and even the Bush Administration is saying that legalizing the importation of cheap drugs - which haven't yet received FDA approval - is likely to drive up the cost to prices at which domestic drugs are selling.

State and local governments that advocate the illegal importation of drugs from Canada (without FDA intervention) are likely to face lawsuits from complications and side effects of imported medicines. States that encourage folks to buy drugs from Canada cannot simply disclaim legal liability. By promoting behavior that is illegal, the state and local governments are setting up a hazardous condition. Because of the inherent negligence, the state has no protection from liability when someone is injured as a result.

UPDATE: Thomas Sowell provides excellent commentary about the cost of being too safe.