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So this is how it stands now. People in the U.S. pay exorbitant prices to pharmaceutical companies for many prescription drugs. Some prices are so high that people are rationing them or doing without. Insurance companies are refusing to cover them or are making it very hard to make them accessible. Canada pays the same manufacturers significantly less for their products, allowing Canadians much more reasonable prices for their medications. It doesn’t mean that the drugs are cheap, just that they are cheaper.
Why are Canadian prices lower? The easy answer is that in 1987, the Canadian government implemented price controls, limiting what pharmaceutical companies can charge. It simply refused to pay prices it considered to be too high. But there are other reasons as well. For example, there are far fewer middlemen in the industry and the companies can’t advertise directly to consumers.
In the U.S., pharmaceutical companies can directly advertise to consumers. It is one of only two countries that allow direct-to-consumer advertising. The other is New Zealand. The result? Increased demand for certain drugs, especially the really expensive ones. The more demand, the more expensive they get.
I wrote about that here:
At some point, U.S. lawmakers and others noticed that Canadian drug prices were cheaper than theirs. So, instead of the U.S. negotiating with the pharmaceutical companies to reduce prices, lawmakers decided to get approval to purchase their drugs in Canada at those cheaper rates, import them into the U.S., and then sell them less expensively. The U.S. Food and Drug Administration (FDA) recently issued approval for the state of Florida to do just that. What is wrong with this picture? A lot.
Let’s start with how many of these drugs are made in the U.S. in the first place. So, these medications would be manufactured in the U.S., shipped to Canada, bought by Florida, and shipped back to the U.S. for sale to its citizens. How does that make sense? Not to mention, there’s the cost of buying the medications from Canada, arranging for shipping, and then distributing them. This all has to be added to the final costs.
Canadians are worried
I was listening to an expert on a local radio station just after the FDA released its approval. He asked Canadians to remain calm and emphasized that this would not happen right away. He also said it wouldn’t affect our own drug supply. I know it won’t happen right away, but I don’t know if I believe him about it not affecting us.
Americans who live near the U.S./Canada border have been crossing over for prescription drugs for years. Others have gone the mail-order route. On top of the lower drug prices here, the U.S.-to-Canadian dollar exchange works very much in their favour. So we know that this already happens and, in some cases, it’s already affecting the drug supply issues.
Not long after Ozempic became so popular for weight loss, parts of Canada started seeing shortages of the drug. In March last year, a news report told us that in British Columbia, more than 15,000 doses of Ozempic were dispensed to U.S. citizens in January and February alone – many of them by mail order. The drug that would cost them about US$1000 at home would cost them only about US$350 in Canada.
As of October last year, there still was an issue with getting Ozempic in the province, leaving some Canadians with type 2 diabetes – the original purpose for the drug – to scramble for their much-needed medication. “British Columbians living with Type 2 diabetes will have to make more frequent trips to their doctor’s offices and pharmacies as B.C. is limiting Ozempic refills,” according to an article from Global News.
There are many more Americans than Canadians
We also have to look at the sheer number of people needing these prescription drugs when comparing the U.S. with Canada. According to this MarketWatch report from 2019, “A recent study estimates that the entire Canadian drug supply would be exhausted in 183 days, if only 20% of U.S. prescriptions were filled using Canadian prescription drug sources. The U.S. and Canada cannot force the companies to manufacture more.”
The expert I listened to reinforced that he didn’t believe that what the U.S. market needs would mean they would be taking drugs away from Canadians. He stated that there would just be larger orders from Canadian representatives that would then be resold to the Americans. But I can’t see that lasting for long. Pharmaceutical companies would say, hold on a minute! We’re getting fewer orders from the U.S., which pays higher prices, and more from Canada, with its lower prices – we’re going to increase our Canadian prices whether the Canadian government likes it or not. Then they can take it or leave it.
The result? The Canadian government would have to allow price increases and Canadians would have to pay more for their drugs. Why? Because the U.S. took advantage of our lower prices.
It’s not good
I’m all for neighbours helping neighbors (spelling change intentional!). And if this was a temporary problem, that would be different. Of course, we should help. But this isn’t a temporary problem and we can’t fix it. People in the U.S. deserve to get prescription medications at a cost that doesn’t make them have to decide if they will eat or take their medications. This needs to be solved in the U.S. Coming to another country to take advantage of their system isn’t fixing it. There may be temporary relief, but it won’t last long and Canadians will bear the brunt of it.
What do you think? Leave your comment below. Let’s get a conversation started.
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As the saying goes, you can’t have your cake and eat it too. I think Canada has to address this issue and not let American‘s purchase the drugs from them (Canada). America wants this for profit medical industry but also wants cheap drugs. In other words they are loving making all the profits but are not addressing the manner of expense for those that cannot afford it. Now Cost Plus Drugs is the first Pharmaceutical company started by Mark Cuban to address some of this issue, but all the other companies in America are literally enjoying all the profits and I seriously doubt it ever changes. I don‘t know, what do you think?