# Why Do Drugs Cost More in the US? **URL:** \ **Category:** Factual Questions\ **Created:** [December 15, 2009, 9:41pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408 "2009-12-15T21:41:45Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [December 16, 2009, 5:55am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/21 "2009-12-16T05:55:12Z")
> [@SenorBeef](#): > > …and their costs of drugs would go up… Actually, I tend to think **RIckJay** is correct on this point: lowering prices in the US will not by itself induce other countries to pay more. It simply may affect the availability of new drugs (as you say). ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [December 16, 2009, 5:59am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/22 "2009-12-16T05:59:13Z")
Well, either the cost would go up or the availability/advancement would go down. Or both. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [December 16, 2009, 6:52am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/23 "2009-12-16T06:52:28Z")
> [@Tom\_Tildrum](#): > > A drug’s prices must cover its costs, though, or else the company will decline to produce it. I’m guessing (and I may of course be wrong), but I suspect that for most widely-used drugs, the US market is large enough for the company to recoup its R&D and other costs, such that overseas sales are largely pure profit, even at reduced prices. So you’re right that it doesn’t really matter that much whether Canada raises or lowers its prices, because the company is still making money regardless. The reverse is not true, though: if the US mandated that a drugmaker charge Canada-level prices domestically, such that the company would not be able to recover its R&D costs, presumably it’s just not going to develop that drug. > > Size can’t be the explanation. United Health Group alone has nearly as many people as Canada, for instance. why isn’t the allocation of money made in the reverse? why isn’t the overseas market used to recoup the R&D and the US market used to pony up the profits and pay for the advertising? money is fungible, the dollar you earn in Switzerland isn’t put on some magical “profit” ledger while the US-earned dollar is put on the “recovered our expenses, yay!” ledger. many such as yourself seem to have this approach that price control = no way seller can recover costs plus be afforded profit. which is not the case. no one forces them to sell the product, so at the end of the day if the price is controlled too low, no one benefits. which is exactly why price controls don’t result in 0 profit, rather they regulate profiteering. To be sure, you incur deadweight loss, but you also transfer surplus from the producer to the consumer. think of it this way: say there is a global organization that issues patents on pharmaceuticals, and has concordant price-setting power for the entire globe. Do you not think that the negotiations to agree on a set price will be resolved in favor of developing a useful drug, or not? Like, really think about this. this is some red herring of american exceptionalism, that the United States takes it up the ass for everyone elses’ benefit, masterfully designed to keep Big Pharma in hock. and no, it’s not size per se - it’s the lack of monopsony. ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [December 16, 2009, 7:22am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/24 "2009-12-16T07:22:21Z")
> [@Rumor\_Watkins](#): > > why isn’t the allocation of money made in the reverse? why isn’t the overseas market used to recoup the R&D and the US market used to pony up the profits and pay for the advertising? Because their medical systems are under the control of one entity. If they decide that the cost of the drugs to save their citizen’s lives is not cost effective, then no one in the country gets the drug. The drug is made with the expectation that the majority of the profit will come from the US market, and so long as what the negotiated price other countries pay is greater than the marginal cost of manufacturing and distributing some pills - which is relatively miniscule - then it still makes sense to sell to those countries for a negotiated price. > [@](#): > > think of it this way: say there is a global organization that issues patents on pharmaceuticals, and has concordant price-setting power for the entire globe. Do you not think that the negotiations to agree on a set price will be resolved in favor of developing a useful drug, or not? Like, really think about this. Yes. Possibly not to the current level of development - and more relevant to my points, it would settle somewhere between the cost to US citizens and the rest of the world. We would pay less, they would pay more. If the rest of the world refused to pay more, and yet the US market also was less profit driven due to price controls, then the rate of medical innovation would suffer. > [@](#): > > this is some red herring of american exceptionalism, that the United States takes it up the ass for everyone elses’ benefit, masterfully designed to keep Big Pharma in hock. How is it American exceptionalism to acknowledge that the US market is much more profitable than markets where single payer entities control the price? That’s just the reality of the situation - there’s profit in developing new technology and drugs for the US market, and we knowledge will find a way to spread around. They are benefiting from the innovation that our system provides due to high profit margins, and conversely we are suffering for it, having to pay full price for these new discoveries while everyone else gets them at a discount. It’s a clear free rider situation. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [December 16, 2009, 9:20am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/25 "2009-12-16T09:20:28Z")
**SenorBeef** , that’s nonsense. In 2001, the last year analyzed by Dr. Marcia Angell, former editor of the New England Journal of Medicine and author of _The Truth About the Drug Companies_, the top 10 drug companies reported $200 billion in revenues from the US prescription drug market. $60 billion of this was spent on marketing and advertising; another $37 million was taken in profits. Compare this to $20 - $24 billion on R&D, of which only $5 - $6 billion was spent on R&D for new active ingredients. In 2008, the total US revenues rose to $291 billion. Drugs are profitable in all markets in which they are sold. Period. Otherwise, they would not be sold in those markets. In Canada, drug advertising costs are in the millions, not billions. $1 - $2 billion a year is spent on R&D. I can’t find any source on what kind of profits drugs companies extract from Canada, but I can assure you that if there weren’t any, there wouldn’t be any drug sales, either. Drug prices in Canada are negotiated, not dictated. ---
**Author:** ![Clothahump](https://avatars.discourse-cdn.com/v4/letter/c/51bf81/32.png) [@Clothahump](https://boards.straightdope.com/u/Clothahump)\ **Post date:** [December 16, 2009, 3:45pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/26 "2009-12-16T15:45:31Z")
> [@](#): > > Why Do Drugs Cost More in the US? Mainly because we develop most of them, and the US Patent laws need overhauling. By the time a drug company brings a drug to market, they may have only 3-5 years remaining on their patent. During that time period, they have to recover their R&D costs and show a profit. If the patent period were lengthened, new drug costs would drop significantly. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [December 16, 2009, 4:13pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/27 "2009-12-16T16:13:13Z")
> [@Rumor\_Watkins](#): > > why isn’t the allocation of money made in the reverse? why isn’t the overseas market used to recoup the R&D and the US market used to pony up the profits and pay for the advertising? money is fungible, the dollar you earn in Switzerland isn’t put on some magical “profit” ledger while the US-earned dollar is put on the “recovered our expenses, yay!” ledger. The US is a much larger market than Switzerland, so the drug’s expected US financials are likely to drive much more of the company’s planning. > [@Nametag](#): > > **SenorBeef** , that’s nonsense. In 2001, the last year analyzed by Dr. Marcia Angell, former editor of the New England Journal of Medicine and author of _The Truth About the Drug Companies_, the top 10 drug companies reported $200 billion in revenues from the US prescription drug market. $60 billion of this was spent on marketing and advertising; another $37 million was taken in profits. Compare this to $20 - $24 billion on R&D, of which only $5 - $6 billion was spent on R&D for new active ingredients. > > In 2008, the total US revenues rose to $291 billion. > > Drugs are profitable in all markets in which they are sold. Period. Otherwise, they would not be sold in those markets. In Canada, drug advertising costs are in the millions, not billions. $1 - $2 billion a year is spent on R&D. I can’t find any source on what kind of profits drugs companies extract from Canada, but I can assure you that if there weren’t any, there wouldn’t be any drug sales, either. Drug prices in Canada are negotiated, not dictated. Advertising is a red herring. Drug companies advertise because they expect it to increase revenue and profit (and thus the funds available for R&D and other purposes), not because they think it will decrease them. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 16, 2009, 4:14pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/28 "2009-12-16T16:14:56Z")
> [@SenorBeef](#): > > Because their medical systems are under the control of one entity. If they decide that the cost of the drugs to save their citizen’s lives is not cost effective, then no one in the country gets the drug. > > The drug is made with the expectation that the majority of the profit will come from the US market, and so long as what the negotiated price other countries pay is greater than the marginal cost of manufacturing and distributing some pills - which is relatively miniscule - then it still makes sense to sell to those countries for a negotiated price. > > Yes. Possibly not to the current level of development - and more relevant to my points, it would settle somewhere between the cost to US citizens and the rest of the world. We would pay less, they would pay more. If the rest of the world refused to pay more, and yet the US market also was less profit driven due to price controls, then the rate of medical innovation would suffer. > > How is it American exceptionalism to acknowledge that the US market is much more profitable than markets where single payer entities control the price? That’s just the reality of the situation - there’s profit in developing new technology and drugs for the US market, and we knowledge will find a way to spread around. They are benefiting from the innovation that our system provides due to high profit margins, and conversely we are suffering for it, having to pay full price for these new discoveries while everyone else gets them at a discount. It’s a clear free rider situation. The problem with this thesis is that drug companies spend much more in DTC advertising in the US than they do on R&D. Canada (for example) lacks DTC advertising (subject to limited exceptions). ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 16, 2009, 4:22pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/29 "2009-12-16T16:22:57Z")
> [@Tom\_Tildrum](#): > > The US is a much larger market than Switzerland, so the drug’s expected US financials are likely to drive much more of the company’s planning. > > Advertising is a red herring. Drug companies advertise because they expect it to increase revenue and profit (and thus the funds available for R&D and other purposes), not because they think it will decrease them. No, it isn’t, since you are comparing different markets - no DTC advertising in Canada, for example. The existence of DTC advertising effectively forces companies to engage in it, or lose market share: without DTC advertising, people still require drugs and will still buy them (as they do in Canada), but the choice of which drug to buy isn’t conditioned by what they see on TV. It’s a classic “prisoner’s dilemma”. Everyone would be better off without DTC advertising, since costs would be lower for everyone; ideally, DTC advertising merely reallocates market share but does not grow the actual amount of drugs consumed (to the extent it _does_, it is presumably socially undesireable!). Naturally, since companies must make a profit, these costs are (in absence of price controls) passed on to the consumer … viola, higher drug prices in the US. Presumably a company could lower its costs by not advertising and sell a drug cheaper in the US, but it would seem that this is not a winning strategy for gaining market share. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 16, 2009, 7:10pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/30 "2009-12-16T19:10:44Z")
> [@qazwart](#): > > Drug prices in the United States are not high. > > What’s confusing you is that the **list** price of the drug in the United States is high, but no one pays list price! Well, no one of any importance… > > It’s quite simple, let’s say MercMedGlaxSmithBarney creates a drug called Whatadorfilin and claims the list price is $54.95 per little blue pill. Well, your insurance company negotiates with MercMedGlaxSmithBarney and only pays $5.95 per pill. The Canadian government does the same thing too which is why drugs are cheaper in Canada. This is a very inmportant point, and tends to suggest that there is less to the “import drugs from Canada” issue than meets the eye, since the only people to benefit might be the people who have no drug coverage. Still, I would have to think the only way the insurers can negotiate is if they have plans with formularies. Otherwise they have no leverage with the drug companies. And a lot of plans don’t have formularies. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 16, 2009, 7:16pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/31 "2009-12-16T19:16:45Z")
> [@SenorBeef](#): > > Drugs are more expensive here because the US is subsidizing medical development for the rest of the world. R&D for new drugs is the bulk of the cost (at least relative to manufacturing and distribution). Once a drug is developed, most of the money is gone as a sunk cost - the actual cost of producing and distributing pills is relatively miniscule. But whatever the use of their drug - it’s valuable to someone, so they charge as much as they can for it, with a lot of the proceeds going to recouping the cost (and of course making a profit) This makes a lot of sense. But in the context of my initial question it still leaves it hanging. Because suppose you imported drugs from Canada at huge discounts. Non-imported versions would be unable to compete. So you would end up with everyone in the US (or at least those not paying discounted prices negotiated by their insurers) buying drugs from Canada and no one paying the higher price that was supposed to pay for the R&D. So you’re back where you started - you’re effectively imposing price controls but insisting on going about it in a roundabout way and relying on Canadian price controls and imported drugs, instead of direct American price controls and local production. It doesn’t make sense to me. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [December 16, 2009, 7:55pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/32 "2009-12-16T19:55:41Z")
> [@Fotheringay-Phipps](#): > > So you’re back where you started - you’re effectively imposing price controls but insisting on going about it in a roundabout way and relying on Canadian price controls and imported drugs, instead of direct American price controls and local production. It doesn’t make sense to me. Well, that’s why drug importation is limited. If it weren’t, not only would U.S. drug companies lose money in the U.S. market due to Canadian market controls, but U.S. drug retailers would either have to buy drugs from Canadian distributors or would be hopelessly disadvantaged against Canadian retailers. (Granted, we are only talking about SOME drugs; most drugs are the same price, or the difference is trivial.) If the flow of drugs were completely free and unimpeded, the inevitable result would be that all expensive drugs in the U.S. market would get there by being first sold to Canadian distributors and then resold through an American retailer for a small markup from the controlled Canadian price. However, the flow isn’t free; U.S. and Canadian laws make it either illegal or impractical. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 16, 2009, 8:01pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/33 "2009-12-16T20:01:19Z")
> [@RickJay](#): > > Well, that’s why drug importation is limited. OK. But the point is that the idea of importing drugs from Canada is a constant issue, and has been proposed over and over again, and was just proposed as an amendment to the current HC reform bill (it failed). And my question is: to the extent that you ARE willing to import drugs from Canada, why not just do the whatever the Canadians are doing over here instead, if it would effectively be doing the same thing as importing but just in a more direct and efficient manner? ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [December 16, 2009, 8:27pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/34 "2009-12-16T20:27:08Z")
> [@Fotheringay-Phipps](#): > > And why can’t we just figure out why they’re cheaper in other countries & do the same here, rather than import them? > > The most common reason I’ve seen given for this phenomenon is that other countries impose price controls. OK, then why not just impose them here? If we don’t do that but allow importation, as a practical matter few people will buy the non-price-controlled version anyway, which will force the US price down to the controlled price anyway. So why not be more direct about it and not have things shipped from other countries? > > And if it’s about FDA oversight, then again, either give them up here or don’t import. > > In sum, I can’t think of a reason why we would want to import things from other countries that could just as well be made here under the same conditions and for the same price. But I’ve not seen this issue raised in discussions of the matter - it’s all price versus FDA oversight. > > So I must be missing something. What is it? On the issue of healthcare, most of the ‘safety’ concern is just a smokescreen. We don’t allow importations or price negotiations for prescriptions for the same reason, because it would cut down the profits and influence of the pharmaceutical industry. The term ‘price controls’ is kindof biased. All countries are doing, as far as I know, is using their bulk purchasing power to lower prices. In the private market this happens everyday. Walmart is an example of a company that makes great use of its bulk buying power. Private health insurance uses its bulk buying power via PPOs and HMOs to get cheaper prices in exchange for more volume. If sellers refuse to meet the standards, they don’t get to sell to customer X. If negotiating with drug companies are ‘price controls’ then virtually every industry in the US engages in price controls. So the term itself is pretty biased. Again, the fundamental reason we don’t have negotiations, bulk purchasing power or importations from foreign countries is because the pharmaceutical industry does not want them since they will lower their revenues, profits and influence. So they fight like hell to block them. We also don’t have a public option for the same reason, because it would lower the profits, revenue and influence of private health insurance companies. There have been efforts to allow medicare to negotiate drug prices, and to allow reimportation from other OECD nations. But both bills have died in congress. When you realize the US is as much of a plutocracy as a democracy (if not more), things like this are far less confusing. The government is merely looking out for the interests of those who hold power over them. Sometimes it is the electorate, sometimes corporations. In this case, corporations. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [December 16, 2009, 8:35pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/35 "2009-12-16T20:35:06Z")
> [@Fotheringay-Phipps](#): > > OK. But the point is that the idea of importing drugs from Canada is a constant issue, and has been proposed over and over again, and was just proposed as an amendment to the current HC reform bill (it failed). And my question is: to the extent that you ARE willing to import drugs from Canada, why not just do the whatever the Canadians are doing over here instead, if it would effectively be doing the same thing as importing but just in a more direct and efficient manner? We’ve considered that with medicare. Negotiations with medicare for Part D would save $24 billion a year. [http://www.medicalnewstoday.com/articles/169218.php](http://www.medicalnewstoday.com/articles/169218.php) Again, the reason we do not is because the pharma industry doesn’t want negotiations. That is all there is to it. It has nothing to do with safety, health or any of those other smokescreen reasons. Its like bankruptcy laws. On one hand lenders and bankers want to make loans to low income people who are financially insecure since they will end up paying tons in fees and repossessing their property they buy (houses, cars). On the other hand, if those low income people go bankrupt they don’t have to pay anything back. So its a balancing act. Low income and financially insecure people pay the most fees, interest and repossessions, but they go bankrupt too. So lenders try to get the best of both world. They block regulations to block unfair and predatory lending, while also trying to abolish and severely limit bankruptcy laws. And they are winning. That way they increase their revenues and lower their losses. Again, when you realize the US is a plutocracy these things stop being confusing. ---
**Author:** ![Superfluous\_Parentheses](https://avatars.discourse-cdn.com/v4/letter/s/8edcca/32.png) [@Superfluous\_Parentheses](https://boards.straightdope.com/u/Superfluous_Parentheses)\ **Post date:** [December 16, 2009, 8:37pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/36 "2009-12-16T20:37:36Z")
> [@Clothahump](#): > > Mainly because we develop most of them, and the US Patent laws need overhauling. > > By the time a drug company brings a drug to market, they may have only 3-5 years remaining on their patent. During that time period, they have to recover their R&D costs and show a profit. If the patent period were lengthened, new drug costs would drop significantly. If that were true, and the limitited time of the “free market monopoly” a patent provides is the only issue, **all (ETA: well, most) drugs longer than 5 years on the market would cost significantly less than new drugs**, simply because drug companies then would compete on price to manufacture those out-of-patent drugs. Personally, I’m skeptical that that’s the case, but I’d be delighted to be shown otherwise. ---
**Author:** ![Nobody](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@Nobody](https://boards.straightdope.com/u/Nobody)\ **Post date:** [December 16, 2009, 9:20pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/37 "2009-12-16T21:20:58Z")
> [@Wesley\_Clark](#): > > The term ‘price controls’ is kindof biased. All countries are doing, as far as I know, is using their bulk purchasing power to lower prices. In the private market this happens everyday. Walmart is an example of a company that makes great use of its bulk buying power. Private health insurance uses its bulk buying power via PPOs and HMOs to get cheaper prices in exchange for more volume. If sellers refuse to meet the standards, they don’t get to sell to customer X. > > If negotiating with drug companies are ‘price controls’ then virtually every industry in the US engages in price controls. So the term itself is pretty biased. I don’t know about other countries, but I once asked about whether Canada negotiated or used price caps, and the answer came back that it does both. So sense Walmart and other private companies aren’t governments who can set prices into law, then the term ‘price controls’ is perfectly valid. ---
**Author:** ![Malthus](https://avatars.discourse-cdn.com/v4/letter/m/85f322/32.png) [@Malthus](https://boards.straightdope.com/u/Malthus)\ **Post date:** [December 16, 2009, 9:34pm UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/38 "2009-12-16T21:34:29Z")
> [@Nobody](#): > > I don’t know about other countries, but I once asked about whether Canada negotiated or used price caps, and the answer came back that it does both. So sense Walmart and other private companies aren’t governments who can set prices into law, then the term ‘price controls’ is perfectly valid. Canada does both, though it is different levels of government doing it. Price caps are terms for the sale of patented drugs through a federal agency known as the Patented Medicine Prices Review Board. More than you ever wanted to know: [http://www.pmprb-cepmb.gc.ca/english/home.asp?x=1](http://www.pmprb-cepmb.gc.ca/english/home.asp?x=1) This board sets the “maximum non-excessive price” for patented drugs using a complex formula; individual provinces run public drug benefit plans, and they negotiate hard with companies to get good prices. The difference is that the PMPRB sets the maximum price for everyone; the provinces negotiate some lesser price for _public_ drug plans (which cover a lot of people but not everyone). Another often-overlooked factor is generic interchangability rules. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [December 17, 2009, 1:02am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/39 "2009-12-17T01:02:32Z")
> [@Fotheringay-Phipps](#): > > OK. But the point is that the idea of importing drugs from Canada is a constant issue, and has been proposed over and over again, and was just proposed as an amendment to the current HC reform bill (it failed). And my question is: to the extent that you ARE willing to import drugs from Canada, why not just do the whatever the Canadians are doing over here instead, if it would effectively be doing the same thing as importing but just in a more direct and efficient manner? Well, I guess that’s the obvious contradiction. The likely answer as to why they’d propose to take an end run through Canada (or wherever, but Canada is, obviously, the easiest foreign country for the USA to get stuff from) is simply that it’s easier, legally speaking. While the laws in question are fifty-seven different kinds of complicated, one would presume that, in general, it’s easier for Congress to remove a trade barrier than it is to monkey with patent law. As has been pointed out, the straightforward truth is that Congress is heavily beholden to the pharmaceutical lobby, and Canada’s Parliament is not. (Canada’s government is beholden to OTHER industries.) Why is is that way is, frankly, an entirely different discussion that involves politics, government structure, market size, culture and a zillion other things, but there it is. Understand, of course, that I’m not some anti-big-business corporation-hatin’ Naomi Klein disciple; I am, in fact, economally right-leaning. Businesses exist to make money, and such limits as we put on them are up to the government to set and the businesses to push as far as they legally can. You can’t blame drug companies for making the biggest profit they can and fighting price controls if it’s possible to do so - within reason. Nor can you blame a government for limiting such things when the citizenry demands it - within reason. ---
**Author:** ![Baron\_Greenback](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/baron_greenback/32/48_2.png) [@Baron\_Greenback](https://boards.straightdope.com/u/Baron_Greenback)\ **Post date:** [December 17, 2009, 1:55am UTC](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408/40 "2009-12-17T01:55:51Z")
> [@Clothahump](#): > > Mainly because we develop most of them [This isn’t at all clear cut](http://www.patentdocs.org/2009/09/paper-declares-that-with-respect-to-drug-innovation-europe-is-ahead.html) [Previous page](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408.md?page=1) [Next page](https://boards.straightdope.com/t/why-do-drugs-cost-more-in-the-us/521408.md?page=3)