Why Do Drugs Cost More in the US?

[Tom_Tildrum]

@Fotheringay-Phipps

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.

As a practical matter, there aren’t enough drugs in Canada to serve the American market. And if the US ever did embrace reimportation in a big way, the Canadians would forbid it, so that their pharmacies would not be drained dry.

[Malthus]

@RickJay

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.

The problem of reimportation is as follows.

There are two forms that reimportation can take: importation for wholesale, or retail purchase (for example, so-called 'internet pharmacies" in Canada that sell to Americans).

The former kind is stimied by the manufacturers, who simply by contract forbid their distributors to distribute drugs to wholesalers outside of Canada. The reasons for this are obvious: why should manufacturers allow their distributors to screw them with their own products? Plus, it is (relatively) easy to control the flow of drugs at this level. Given the labelling differences etc. it is also in line with national laws. Even if Congress eased restrictions, the manufacturers still would not allow it, so this is a pipe-dream as far as controlling US prices is concerned.

The latter kind is not so easily controlled and indeed internet sales of Canadian drugs to US citizens is big business. It is very difficult to control cross-border sales of drugs for individual use. The major form of control is as follows: for a prescription drug (or “Schedule F”) a pharmacy in Canada requires a valid prescription from a Canadian physician; a fax of a US prescription will not do. This has led to a whole minor industry of Canadian physicians “countersigning” (that is, rubber-stamping) US prescriptions for this purpose. The problem is that the relevant Colleges of Physicians (the Canadian provincial regulators) have mostly come out with policies stating that counter-signing a prescription without physically examining a patient, or issuing a prescription based on such stuff as an internet questionnaire, is an act of professional misconduct. This makes it very difficult for Internet pharmacies to operate legally.