Why Are Canada’s Prescription Drugs So Much Cheaper Than Ours?

Why Are Canada’s Prescription Drugs So Much Cheaper Than Ours?

Why Are Canada’s Prescription Drugs So Much Cheaper Than Ours?

US drug prices are out of control—Bernie Sanders wants to change that.


The US-Canadian border, where hundreds of billions of dollars in goods and services are traded freely between countries each year, is a critical lifeline for the North American economy. But the same porous divide marks the line between life and death for millions of Americans, thanks to drug monopolies holding them hostage to brutally overpriced medicines.

Though Congress has resisted reform for years, public outrage over the industry’s profiteering is rising as volatile drug markets have priced both insured patients and the uninsured poor out of essential medicines. Now that Trumpcare threatens to further deregulate the health-care industry, progressive lawmakers hope to chip away at Big Pharma’s monopoly by turning north.

Senator Bernie Sanders recently introduced a bill that would allow Americans to buy prescription drugs from Canada, provided that they meet US regulatory standards. The bill could start to transform the process by which Americans get their medicine, substantially lowering drug costs for both individuals and insurance providers, including many working poor families and older consumers on Medicaid and Medicare.

Because Canada, like virtually every other wealthy industrialized nation, offers comprehensive universal health-care coverage, Canadians generally pay much lower prices for medicines overall than their southern neighbors. US consumers, who are locked in Big Pharma’s captive market, pay brutally inflated costs through insurance or out of pocket—for drugs that Canadians can buy at a fraction of the price.

The Improving Access To Affordable Prescription Drugs Act (with a companion bill in the House) would give Americans access to Canada’s cheaper drugs by allowing cross-border retail purchase and imports of medicines. The measure could save consumers as much as 35 to 55 percent of the usual US list price. For example, the popular cholesterol drug Lipitor can cost Canadian patients under $50, compared to more than $150 for the same dose sold on the US market.

Though the measure would only curb one source of health-care inflation, and though Canadian market access would still be restricted under the law, granting more consumers access to a rationally priced market (with the possibility of adding more countries’ markets later on), could start to chip away at Big Pharma’s market stranglehold and spur campaigns for more broad-based health-care restructuring. Predictably, the pharmaceutical industry lobby is smearing the measure by painting it as “government interference in prescription drug pricing.”

But the public is frustrated enough with “free market” drug pricing to finally seek government intervention. Runaway drug prices will cost Americans about $328 billion this year, about $50 billion straight from consumers’ pockets, while drug makers enjoy record profits. As individual patients struggle with medical bankruptcy or get forced to choose between rent and their next insulin shot, the drug cost crisis also feeds into wider societal ills, including the epidemic of medical bankruptcy and even opioid abuse.

Under pressure from pharmaceutical industry lobbyists, both Democrats and Republicans have repeatedly squelched efforts to regulate drug prices. But there may be more momentum around drug pricing today, as Republicans seek to shred the Affordable Care Act, and even President Trump has called for drug-price reform (though he favors the dubious pro-business version: deregulating the industry as a solution, rather than tightening market controls).

“Unlike other sectors in health care,” says Peter Maybarduk, director of Public Citizen’s Access to Medicines program, “drug spending really doesn’t have to be what it is. It’s fixed by no factor other than our acquiescence to the monopoly pricing power of the drug corporations. It’s not principally about paying for expertise or labor or administrative costs…so this is an area where you can take a real whack at health-care costs.”

The perennial excuse for prohibiting Canadian drug imports is “safety” concerns, based largely on the spurious notion that Canadian drugs are not subject to comparable standards to that used to regulate US drug markets. (In fact, many of them are just resold US-made drugs). A recent analysis by the Senate Committee on Aging acknowledged that typically the standards of Canada and other similarly developed countries “are stringent and comparable to US standards.” The most recent version of the bill also includes safeguards for oversight of drug sourcing by the Food and Drug Administration, and protections against counterfeiting.

Still, health-care advocates warn that the industry’s monopoly power can only be curbed through much stricter corporate regulations, not just by tweaking consumer markets.

The Senate report cited systematic market distortions through patent law loopholes: In recent years lax regulation has allowed the industry to hike the price of specialized drugs like the liver medication Cupramine by several thousand times within five years, with no additional investment in development—in other words, pricing the drug not according to its effectiveness, just by how much patients can pay for survival.

Adding injury to insult, the report found, some companies cloak their predation in charity with special pricing through “exclusive patient assistance programs,” but often these are used to capture the market, tie patients to their brands, and keep out potential competitors, like generic drug makers that could provide cheap unbranded versions.

While Republicans claim to be ideologically opposed to government control of health care, Maybarduk notes, “Government is involved already. It’s the government that confers the monopoly power on companies…that allows the companies to price as they please.” Simply reversing this regulatory manipulation is “going after the legalized corruption at work in certain parts of the system.”

The Sanders bill does include more expansive reforms, including a fund to promote public financing for clinical research and development of new treatments for bacterial infections—a non-profit-focused pathway toward combating antibiotic resistance. And Canadian market competition would be coupled with stricter standards for issuing patents to drug makers seeking exclusive control over brand markets.

But a long-term overhaul of the system requires going beyond simply opening new consumer markets to shift the entire market’s incentive structure to prioritize public health. Comprehensively reducing costs involves expanding consumer leverage through mass purchasing power—for example, by allowing Medicare to negotiate prices on behalf of beneficiaries nationwide. Ultimately a single-payer structure, in which the government controls all health care financing, is the only system that would really guarantee both equity and access for consumers and providers.

We can’t purchase Canada’s health-care system. But allowing people to fill their prescriptions under a fairer cost structure could help grow the public’s appreciation for the vital role government plays in providing health care as a human right. And maybe people will realize that citizens of the world’s richest nation shouldn’t have to go to another country to get it.

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