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Are Canadian Pharmacies the Solution to America's High Prescription Drug Prices?

The prospect of cheap Canadian meds is once again captivating policymakers.

A pharmacy in Toronto, where all the good cheap drugs are. Photo credit: Rene Johnston Toronto Star/ZUMA Press/NewscomA pharmacy in Toronto, where all the good cheap drugs are. Photo credit: Rene Johnston Toronto Star/ZUMA Press/NewscomEvery day for the last three years, I've started my morning with four prescription pills that cost roughly $11 each. I say "roughly" because the price fluctuates. The last time I filled a 90-day prescription, the full cost was $4,037. Sometimes, a 90-day refill costs hundreds of dollars less. But it's always expensive enough for one of the pharmacy techs at my local Rite Aid to let out a whistle when I tell them what I need to pick up.

About a year ago, someone I suggested I check out the prices for this drug in Canada. My medicine, which is called Lialda, turns out to cost thousands of dollars less just 500 miles north of D.C. Global Care RX, a Canadian online pharmacy, sells a 90-day supply of Lialda for $710, while Canadian Pharmacy King sells it for $734.

Buying prescription drugs from a Canadian website isn't legal, but many Americans do it anyway because of the government's unofficial "non-enforcement policy" for personal imports. First publicized in 1998, the policy basically says the Food and Drug Administration (FDA) will focus its enforcement efforts on unapproved imported drugs intended for commercial markets here in the U.S., and that patients who order personal amounts of non-controlled substances from foreign pharmacies will generally go unharassed.

But some recent developments suggest the FDA is abandoning that policy, and that means it's time to talk once again about why Canada seems like such an appealing solution to high prescription drug prices here in the U.S.

In October 2017, FDA agents raided nine stores in Central Florida that facilitate prescription drug buys from online pharmacies nominally based in Canada. The owner of six of those Florida stores told Kaiser Health News that he doesn't sell or receive the drugs; he just helps older patients—all of whom have prescriptions—find legitimate online pharmacies.

The FDA agents seized patient records and financial information, and they copied computer files. They also asked owners to sign letters acknowledging that parallel importing of prescription drugs is illegal.

In response to the raids, Sens. Amy Klobuchar (D-Minn.) and Charles Grassley (R-Iowa) sent a letter on December 26 asking FDA Commissioner Scott Gottlieb to explain whether the FDA has abandoned its non-enforcement policy. It also asked him to support the Safe and Affordable Drugs from Canada Act, a bill co-sponsored by Klobuchar and Sen. John McCain (R-Ariz.) that would "allow for the personal importation of prescription drugs from approved pharmacies in Canada for personal use with a valid prescription."

We've been here before. In 2000, President Bill Clinton signed the Medicine Equity and Drug Safety Act, which would have allowed the importation of prescription drugs from developed countries if the secretary of health and human services certifies that importation doesn't pose a risk to U.S. consumer safety. HHS Secretary Donna Shalala and her successor, Tommy Thompson, both declined to certify that claim, and the law never went into effect.

This latest effort may also fall short, but regardless of its odds, let's talk about why Canada looks like a solution to high drug prices here in the U.S.

Let's start with the easy one: Why are identical drugs cheaper in Canada than in America?

Because Canada's government sets the prices for all patented drugs, while in the U.S. drug makers charge as much as our pseudo-free market will bear.

More specifically, Canada's Patented Medicine Prices Review Board (PMPRB) invites drug makers to submit a price proposal and sales information, and the board then compares that quote to the prices of similar therapies in France, Germany, Italy, Sweden, Switzerland, the United Kingdom, and the U.S. The drug goes to market if the company's initial quote comes in under the price ceiling established by this comparison analysis. If the company's proposed price comes in above what the PMPRB deems reasonable, the two parties negotiate. If they can't come to an agreement, the Federal Court of Canada makes a ruling. (You can read more about how Canada determines the max price for a given drug in this analysis from Springer.)

In the U.S., what you pay varies widely. If you have a high-premium insurance plan, you're likely responsible just for a co-pay. Your insurance company may cover only a generic version of the drug you've been prescribed, or a cheaper, older drug that's indicated for the same disorder (called "step therapy"); but you're likely not paying full price for any drug unless you're uninsured, on a high deductible plan, or just really want to use a formulation that your policy doesn't cover. Companies that make super-expensive second- and third-line therapies will reimburse patient co-pays, which can be hundreds of dollars a month even for people with high-premium insurance plans.

It's a different story for cash patients. People with no prescription drug coverage or who are on a high-deductible health insurance plan see the actual prices of prescription drugs. I had no idea how much Lialda cost, for instance, until I started a job with a high-deductible plan, at which point my share of the bill jumped from a $25 co-pay to several thousand dollars. While there are tricks cash patients can use to lower their out-of-pocket costs—prescription discount cards can reduce the pharmacy sticker price (though never to the level of a PPO co-pay), and filling generic prescriptions at Costco is almost always cheaper than the nearest chain pharmacy—paying cash for prescription drugs in the U.S. is mind-bogglingly expensive.

The one constant across all these pay models is that drug makers—like all private sector firms—don't voluntarily leave money on the table. Drugs that cost less in Canada are cheaper because the Canadian government won't approve a drug for the Canadian market if it costs more than a government body deems appropriate. There is no such gatekeeper in the American market, and there is arguably no way to pay significantly less for branded prescription drugs because the American health care system is not optimized for comparison shopping. This is why nearly 20 million Americans get their prescriptions from overseas.

This doesn't explains why I can't legally buy the same drug made by the same company in a similarly run factory from a first-world country where it's much, much cheaper.

Like most industries, the pharmaceutical business relies on the ability to charge different prices in different places. And as Cato's Roger Pilon noted back in 2005, that market segmentation strategy only works if pharmaceutical companies can constrain "parallel trading," a process where buyers in low-price markets re-sell prescription drugs to people in higher-priced markets. Though it's often called "drug reimportation," parallel trading is the more accurate term for what happens when pharmacies in Canada compete in the American market against the pharmaceutical companies who supply them.

The practice of parallel trading is legally protected in the European Union, where all the participating import and export countries use price controls. It hasn't been legalized here in part because America is the closest thing drug makers have to a gold mine:

In addition to a favorable IP and regulatory environment, U.S. laws allowing direct-to-consumer advertising creates immense demand for specific patented drugs. More importantly, the United States is the world's largest free-pricing market for pharmaceuticals. As a result, prices are comparatively high to make up for lower profits in other countries and to cover R&D costs. The United States also has high per capita incomes, unmatched access to healthcare, a large elderly population, a culture of end-of-life prolongation, high rates of chronic diseases and drug consumption and a strong consumer preference for innovative drugs. All of these factors contribute to it being, by far, the world's largest pharmaceutical market with $333 billion in sales in 2015, about triple the size of its nearest rival, China. The United States will remain the world's most important market for the foreseeable future with healthy growth expected across all product sectors.

Allowing U.S. consumers to engage in parallel trade would require pharmaceutical companies to lower prices here, negotiate price increases with other OECD governments, contracturally prohibit buyers from re-selling, or reduce drug sales to low-price countries so that they have no surplus to export. None of those options are as easy as lobbying the U.S. government to prevent parallel trade and preserve America's status as a lone cash cow in a world of price controls.

So what would happen if Congress legalized the purchase of Canadian pharmaceuticals?

It's difficult to say. Parallel trade between E.U. members received formal protections in 1995, and the practice in Europe is far more heavily regulated than the process put forth in the McCain-Klobuchar bill. Parallel importers in the U.K. have to be licensed and have to pay for repackaging costs. A study published by the AARP in 2005 highlighted some other regulatory provisions, namely:

(1) the EU treaty does not allow products to be parallel imported from outside of the EU (and the European Economic Area) so long as a marketing authorization holder operates within the EU; (2) drug manufacturers are allowed to block the sale of an imported product if its original packaging has been modified in a way other than what is necessary to permit its sale in the importing country; (3) member states are allowed to prohibit or limit exports to protect human life and public health; (4) manufacturers can manage their inventories of a given product in a member state, so long as they do not explicitly ban exports to other member states.

Following in the E.U.'s footsteps would require U.S. officials to build a regulatory scheme from scratch, which would likely blunt the impact. Or we could do what Pilon suggested and simply repeal the prohibition on parallel trading without introducing any formal system to regulate it.

So what would the parallel trade legislation sponsored by McCain and Klobuchar do?

The "Safe and Affordable Drugs from Canada Act of 2017" would crack the flood gates, not fling them open.

The bill tasks the Department of Health and Human Services with identifying licensed Canadian pharmacies that have existed for at least five years and that are willing to undergo unannounced U.S. inspections, submit their products for quality control tests, and agree to a grievance resolution process. American patients, meanwhile, wouldn't be able to order biological drugs, drugs that need to be refrigerated, or controlled substances. U.S. patients would still need a prescription from a U.S. doctor—and couldn't order more than a 90-day supply. The bill also prohibits re-selling Canadian drugs here in the U.S., and it doesn't seem to allow the establishment of drug importation businesses.

Considering that Canada is the only parallel trade partner the bill would allow, that Canada's drug prices are second highest in the world after ours, and that their population is 10 percent of ours, this bill seems tailored specifically for old people who want cheaper statins and antihypertensives.

If we want prices to come down in the U.S., we should probably just repeal the ban on parallel trading altogether and allow importation for both personal use and re-selling. This would force drug companies to renegotiate with the governments of Canada and Europe, which are only able to offer their citizens low prices because American citizens can't buy from anywhere else.

In the meantime, U.S. patients will continue to pay for both themselves and foreign beneficiaries of socialized medicine.

Photo Credit: Rene Johnston Toronto Star/ZUMA Press/Newscom

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  • BestUsedCarSales||

    I've started my morning with four prescription pills that cost roughly $11 each

    Didn't realize that prescription Molly existed.

  • colorblindkid||

    So if we completely got rid of all parallel trading regulations, Europeans and Canadians will have to pay more for drugs and Americans will have to pay less? Yes, Please.

  • JWatts||

    I agree and support the policy of getting rid of the stupid official Drug policy.

  • sharmota4zeb||

    Americans would pay less. Europeans and Canadians would either keep paying less, or they would realize that it costs corporations money to invent things and pay more for their drugs because they want drug companies continue to raise life expectancy. I would be happy with either decision. My death is probably 40 years away, and I do worry about the social security balance of payments.

  • Chipper Morning Baculum||

    4 prescriptions, Riggs? Let's see, we got the one to reduce the rugged handsome looks to legal levels, the second to shrink down the testicles so you can walk, the third to keep the blood from developing its own separate immune system, but what's the fourth for?

  • BestUsedCarSales||

    Just ol' fashioned speed.

  • Fist of Etiquette||

    Or we could do what Pilon suggested and simply repeal the prohibition on parallel trading without introducing any formal system to regulate it.

    Oh my no. That Pharma Neutrality is there for your protection.

  • BestUsedCarSales||

    If they open it up then I will immediately start taking every dose of every hormone I can find. IS THAT SOMETHING AMERICA WANTS!!?!

  • sharmota4zeb||

    Soy has natural chemicals the mimic estrogen.

  • Billy Bones||

    Very good article. Articulates a major problem in the pharma business. But, unfortunately, he buries the real culprit in the last, one sentence paragraph:

    "In the meantime, U.S. patients will continue to pay for both themselves and foreign beneficiaries of socialized medicine."

    IMHO, reformulation of our draconian patent/copyright/trademark regulation is the starting point to this problem, and possibly the only solution we need. (Do I need to bring up Epi-pen to prove my point?) This article is a good end-run on a broken system. Personally, I would just like to see the problem fixed.

  • BestUsedCarSales||

    I really do wonder how much could be improved by simply either making the FDA more efficient (How do we do that? No idea), or just allowing for less goods to require FDA certification, or even just doing away with it.

    How many Epi-pen type situations are out there? I imagine more than one would expect. Or even if we just loosened regulation about prescriptions. I wonder how much hassle would be saved if I could just buy classes of drugs like Psuedoephedrine without all the pain in the ass required now.

  • BYODB||

    I wonder how much could be improved by burning the FDA to the ground and replacing it with nothing.

  • JWatts||

    I think it's obligatory to salt the ground afterward.

  • Quo Usque Tandem||

    Throw in the Department of Ed and I'll provide the torches. Hyperbole of course, in case a bored US Attorney is reviewing these comments, as they have been known to do.

  • Billy Bones||

    I can offer no solutions. I'll leave that to person's much smarter than I, but there are things we could change within the FDA to improve situation. Besides the fact that we allow extraordinarily long patents to Pharma (justified by them needing to recoup R&D costs (although they have no problems spending billions on advertising telling me what to ask my doctor for)), we currently allow Pharma to introduce a new non-active ingredient to the formula of an expiring drug and change the name slightly, and we give them a whole new patent, even though nothing about the drug has actually changed. This is about as crony-capitalism as there could be (excluding Ex-Im Bank).

  • Robert||

    So what, as long as the old drug is still available?

  • Larry M||

    Billy wrote "we currently allow Pharma to introduce a new non-active ingredient to the formula of an expiring drug and change the name slightly, and we give them a whole new patent, even though nothing about the drug has actually changed."

    DISCLAIMER: I'm not a lawyer. The following is what I think a lawyer would tell you. Ask one if you need to know.

    It doesn't quite work that way. When a patent application is written, the applicant writes the claims (enforceable part) as broadly as possible, to prevent competitors from "working around" the patent which ultimately issues. If the manufacturer were to first patent a drug with three active ingredients, and then (when that patent was near expiration) to file an application for a patent on a formulation with a fourth, inactive ingredient, the competitor could simply manufacture the original formulation and not be affected by the second patent.

    And that assumes that the USPTO (Patent Office) would even allow such a patent. If the inventive application is not patentable subject matter, or not innovative, or is obvious, or not fully explained and not reproducible by a person with ordinary skill in the art, the USPTO would simply reject the application.

    (continued)

  • Larry M||

    (continuing)
    Let's look at a common and much more interesting situation. Start with the same scenario you describe--a manufacturer with a pharmaceutical patent which is about to expire. The drug has to be taken multiple times a day, which is a nuisance. The manufacturer decides to make a controlled-release version, usually done by putting small particles inside a slow-dissolving compound so drug delivery occurs during prolonged dissolution in the gut. We all know of drugs which have evolved like this:
    Metoprolol: started as Toprol, controlled release version is Toprol-XL
    Oxycodone, controlled release version is Oxycontin (Continuous, get it?)

    35 USC §103 states that a patent must be non-obvious. The test for this is that if the problem were posed to a person with ordinary skill in the art at the time of the patent application, and he were aware of two (or more) things known at the time, it would be obvious to combine them to result in the invention. In the drug case, the patent examiner would say "The pharmaceutical compound was known--you have the expiring patent on it. And it's well-known to make a compound slow-release by preparing it in a slow-dissolving compound--here are some old patents and publications on it. So your application is rejected under Section 103.

    And by the way, in case you didn't realize it, double-patenting (multiple patents on the same invention) is also forbidden.

  • ||

    I really do wonder how much could be improved by simply either making the FDA more efficient (How do we do that? No idea), or just allowing for less goods to require FDA certification, or even just doing away with it.

    I say you just make compliance voluntary - like getting a UL stamp. Some products will proudly advertise "FDA-approved!" while others will be cheaper, but will be caveat emptor. You want to pay $100 for an FDA-approved Epi-Pen, or do you want to pay $1 for a cheaper knock-off that doesn't have the stamp? The market will decide.

  • EscherEnigma||

    Or even if we just loosened regulation about prescriptions
    Eh, that gets into the other drug war.

    Which isn't to say I'm not for it. Let's MAGA and be able to order morphine and cocaine in the Sears catalogue. Prescriptions and insurance can even still be relevant, as that'll be the magic ticket to getting it cheaper. But let the FDA move back from being "gatekeeper" and move into "quality assurance". If it's FDA approved, you know it actually works. If it's missing that sticker, you know there's a good chance it's no better then a placebo.

  • BestUsedCarSales||

    Agreed. Eventually I would like to allow for other types of accreditation, as I believe faster and better alternatives to FDA accreditation would occur, but that seems even less likely then the already unlikely scenario we are dreaming up.

  • Eric Bana||

    I wonder about automatically allowing prescription drugs and medical devices that have been approved by FDA counterparts in any one of the UK, EU, Canada, Japan, or Australia.

    It would also probably help if doctor's prescriptions were required for fewer drugs.

  • sharmota4zeb||

    Once a psychopharmaceutical is on the market for 50 years, it should be over the counter.

  • I am the 0.000000013%||

    I think the answer to the FDA being a gatekeeper with all that implies is to allow private drug certification agencies to exist. If on top of that the government protected reviewers of the drugs, medical devices, and the certification agencies, we'd drop the price to market of drugs considerably.

    Pseudophed used to be available over the counter till our drug warriors decided we couldn't have it. I wonder how much the lobbyists paid for our government to protect us from that possible misuse?

  • I am the 0.000000013%||

    It is sort of available over the counter - you just have to grab a little card and go to the pharmacy counter and present your license where they then let you buy some after they enter your info into a database.

    I object to this for two reasons. I don't want my information entered into a database that is being looked at by our drug warriors.

    I don't want to have to go the pharmacy counter, because it's the highest concentration of diseases short of going to a hospital. That is far more detrimental to my health than somebody making whatever drug it is they make out of it.

  • I am the 0.000000013%||

    Go buy some and get back to me.

    The Mayo clinic does not say anything about what hoops you have to jump through to buy real Sudafed. I've bough Sudafed in Rochester MN just down the street from the Mayo, and they required me to purchase it at the pharmacy counter with a valid ID (which in my case was a valid drivers license).

    As to the latter point - it was an attempt at humor, though I'd prefer not to go to the pharmacy counter because it has a higher concentration of people with illnesses then most other places, and some of those illnesses are infectious. You are missing something in your brain if you aren't aware of that. All those people behind the pharmacy counter are wearing gloves for a reason.

  • I am the 0.000000013%||

    Here is a link to the FDA page that states pseudoephedrine is no longer available OTC because of drug manufacturing concerns. I had to shorten the link because the commenting system didn't like one of the URL words:

    http://goo.gl/iizruz

    Here is the opening line of the page:

    The Combat Methamphetamine Epidemic Act of 2005 has been incorporated into the Patriot Act signed by President Bush on March 9, 2006. The act bans over-the-counter sales of cold medicines that contain the ingredient pseudoephedrine, which is commonly used to make methamphetamine

  • Billy Bones||

    And I apologize for my illiteracy. I read "patent" not "patient" in that sentence, but I think my point stands regardless.

  • Curly4||

    I think that there is another reason that prescriptions cost more here in the US is most other governments force the drug manufacturers to sell their products at a very low price in their nation. So to make up that difference and to fund research for more new drugs to replace the ones that they have that will in a few years run out of patent protection.
    So I propose that any drug manufacturer foreign sell their products in the US at an equivalent price that it is sold in the more advanced western nations.

  • swampwiz||

    That doesn't sound very libertarian; that sounds Stalinist!

  • BYODB||


    Drugs that cost less in Canada are cheaper because the Canadian government won't approve a drug for the Canadian market if it costs more than a government body deems appropriate.


    And, of course, American's pay more to cover the losses a company might incur by undercutting their profit margin in order to legally sell in Canada. It's just a grander scale of the same shit you see in your local E.R.


    America subsidizes basically the entire planet in more ways than most of us can imagine. It's bizarre that most of the rest of the world wants to neuter us to be more like them when, if we did, their countries would literally fall apart in some cases.

  • EscherEnigma||

    Except the ER is obligated (thanks to Reagancare) to serve anyone that walks into them. Drug companies don't have to sell to Canada.

    So have no doubt, if they're selling a drug, it's for one of two reasons:
    (1) they're making a profit
    (2) it's part of their PR efforts.

    But if the company isn't getting some benefit from selling a drug? They would stop. So sure, we're paying more then other places, but the companies are still making a profit elsewhere.

  • BYODB||

    Oh, they're making a profit. Specifically, the profit that Canada thinks they should be making. The difference between what the company thinks their product is worth and what Canada will pay for it can be made up in other markets. Nowhere is what you are willing to pay as an individual considered.

  • EscherEnigma||

    American's pay more to cover the losses a company might incur [...]


    Oh, they're making a profit.
  • BYODB||

    Riddle me this: do you consider a loss of profit you could have earned, due to legislative fiat, a loss? It doesn't seem that you do.

  • EscherEnigma||

    Revenue - costs = profit (or "loss" if negative)

    So no. Not earning as much as you wanted isn't a "loss", it's just earning less then you wanted.

  • XM||

    If you can't get fair market value for a product (due to legislation or whatever), that essentially a loss. Not many would invest in company if a return on the sales was capped.

    A bulk of the drug innovation comes from America, where pharma companies have incentive to commit to that.

  • MargeBouvier||

    I don't know if I would consider government protected inflated monopoly patent prices "fair market value".
    I general though, you have a fair point for markets that are less skewed by massive intervention than pharma.

  • BYODB||

    I have never known a loss to only refer to overall profitability for a company before, especially in the specific realm of referring to various markets separately. You can take a loss in Hong Kong but make a profit in Ireland. You'll note I was not speaking to overall corporate profitability at any point.

    I will agree that 'undercutting profit margins' was a bit ambiguous, so instead I'll simply say 'reducing prices in one market while raising them in another' so I can be more clear. In this instance, as in many, America pays more so countries like Canada can pay less. That doesn't mean Canada doesn't suffer it's own negative effects because of their idiotic and proven terrible policy of setting price caps, it just means that we get to suffer too because of it.

    Hence the analogy of the E.R., where the cost of seeing any retard that walks in off the street has the cost of their non-paying ass spread onto others who do pay.

  • EscherEnigma||

    You'll note I was not speaking to overall corporate profitability at any point


    Well then I don't know who was, because you're the only one that's brought it up dude. Once again, you decided I said something I didn't and responded to that and then blame me for (again) saying something I didn't.

    Hence the analogy of the E.R., where the cost of seeing any retard that walks in off the street has the cost of their non-paying ass spread onto others who do pay.


    Except that the ER has to serve everyone, and drug companies don't. Canada walks into the ER? The ER can say "fine, I'll just charge America more next time they're in." Canada walks up to a drug company? The drug company can say "nah, it's not worth it to sell to you."

    Drug companies don't charge more in America because they charge less in Canada. They charge more in America because they can. The price of an Epi-pen has nothing to do with Canada.

  • Consigliere of the Dark Ones||

    America subsidizes basically the entire planet in more ways than most of us can imagine.

    For example, the US military budget. Most NATO countries rightly conclude that US military spending will be sufficient to protect them from foreign aggression and spend the money that would go to their military in the absence of US military protection on things like... state-run healthcare.

  • swampwiz||

    Of course, the USA gets a huge benefit in being the currency of last resort, which has kept the USD higher than it really should be, as well allowing the USA to issue cheap government debt to pay for things like this latest tax cut.

  • Old Mexican's Speedos||

    Buying prescription drugs from a Canadian website isn't legal, but many Americans do it anyway because of the government's unofficial "non-enforcement policy" for personal imports.


    So much for "Deez Iz A Nation Of Lawz!®" which xenophobic Trumpistas wield around during their anti-immigrant tirades (along with "Dem Immigruntz Takum Er Jebz" and "They Want To Date Our Daughters!").

    Clearly this is a nation of 'enforceable only' laws.

  • BYODB||

    I had no idea that drug pricing was a baseline government function that's recognized the world over, like borders and immigration have been, for something to the tune of 6000 years. Neat!

  • Juice||

    Yes, setting prices is a very ancient government practice.

  • Citizen X - #6||

    As is maintaining control of the populace by whatever means imaginable.

  • BYODB||

    I'll admit, you got me on that one. That is a pretty damn ancient practice when you put it like that.

  • plusafdotcom||

    ... reminds me of the Nixon-Carter era of "Wage and Price Controls."

    Anyone here remember how THAT glorious plan worked out? I do.

    And the difference in potential success in the long run between controlling wages and prices and controlling pharma pricing is What, again?

  • Juice||

    More specifically, Canada's Patented Medicine Prices Review Board (PMPRB) invites drug makers to submit a price proposal and sales information, and the board then compares that quote to the prices of similar therapies in France, Germany, Italy, Sweden, Switzerland, the United Kingdom, and the U.S. The drug goes to market if the company's initial quote comes in under the price ceiling established by this comparison analysis.

    So, do those countries also look to each other's tight price controls to set their own price controls? Is it one big circle jerk? Where does the actual price information come from?

  • BestUsedCarSales||

    Is it one big circle jerk?

    That's what most things are government and this comment section included.

  • plusafdotcom||

    ... isn't that just a relabeled version of Price-Fixing or intercorporate collusion (but at the State level?

    Gee... illegal for companies but not for governments? 1984's Doublethink in action!

  • Quo Usque Tandem||

    A rather dark place, I suspect. Probably what their socialized government subsidized health market thinks it can bear.

  • EscherEnigma||

    Off the top of my head, I think it is part of why new drugs are slower to get introduced in other markets. And yeah, the price controls will continue to drive the price down over time in the "circle jerk" you mention, but eventually it hits a point where the drug companies can honestly say "if I drop my price lower, i just won't sell" and that's where they stop. It's why older drugs are cheaper then newer ones.

  • BYODB||


    And yeah, the price controls will continue to drive the price down over time in the "circle jerk" you mention, but eventually it hits a point where the drug companies can honestly say "if I drop my price lower, i just won't sell" and that's where they stop. It's why older drugs are cheaper then newer ones.


    Price controls don't drive prices down in some circular pattern, or at all in fact. They break fingers until there's one left, and then keep holding that last finger as a guarantee that you'll still be able to work a little bit while still making sure you know that they can destroy you utterly with a single motion.

    Also, there's no guarantee they stop there. In fact, there are plenty of examples of getting to that point and then the government simply takes them over because they 'aren't efficient enough'. At which point, of course, that item usually disappears entirely because Government (especially centralized governments) have absolutely no idea what they're doing .

  • BYODB||

    Oh, and just as an aside, older drugs are usually cheaper because:

    A) Efficiencies of scale in production

    B) They aren't as good (or as targeted) as newer drugs

    Go ahead and look at 'older' drugs that don't have alternatives and tell me how 'cheap' they are without a century of expanding production and refined manufacture techniques.

  • EscherEnigma||

    ... seriously dude? You're attacking me because I said "yeah, the price controls are a circle jerk that eventually bottoms out?"

  • BYODB||

    I felt it necessary to point out that there is no bottom when government is involved. RE: Venezuela price controls that morph into full on nationalization that move into full-bore economic collapse.

    It sounded like you were one of the people on these here boards that think that's a good thing, but perhaps I had you mistaken for one of our resident socialists.

  • EscherEnigma||

    So you assumed something, then attacked me because your assumption made you "feel it necessary".

    That sounds peachy.

  • BYODB||

    I think you're a little over sensitive, but if you want to interpret the above as an attack there really isn't anything I can do about it. I was just stating facts as I see them.

  • plusafdotcom||

    +1

  • sharmota4zeb||

    If you think that is bad, you should see the how urban planning works.

    Step 1) Limit the number of homes build in a region.

    Step 2) Watch home prices rise due to the law of supply and demand.

    Step 3) Point to the rising home prices as proof that everyone is living a better quality of life by just being in the planned city.

  • EscherEnigma||

    Cool story. Can we also fix patent law so a company can't keep extending their patent on a drug by tweaking it slightly?

  • BYODB||

    This would be a pretty sensible reform if the FDA had any idea whatsoever what it was that they're regulating. Since their government morons reviewing the work of pharmaceutical geniuses it seems unlikely that this is going to be a possible reform, but stranger things have happened.

  • Robert||

    They can get a new patent on a new version, but the patent on the old version expires.

  • Unicorn Abattoir||

    Drugs that cost less in Canada are cheaper because the Canadian government won't approve a drug for the Canadian market if it costs more than a government body deems appropriate.

    I'm curious if these cost controls end up causing shortages that economics predicts will happen, or if pharma companies just deal with it.

  • BYODB||

    They do.

  • ||

    As a Canadian I am telling you, Canada and many other Commonwealth healthcare systems are lecherous to US healthcare capital. We buy in bulk and we ration it, we get shortages which the taxpayers pay the tab for.

  • ||

    Pretty much.

    And then we act like we're superior and progs use it as proof our system is 'cost effective' and 'compassionate.'

    It's all so very retarded in its retardation.

  • Hank Phillips||

    It's been a long time since I was in Vancouver. But I definitely found cheaper and way better drugs there than in San Francisco.

  • MargeBouvier||

    Vancouver is the drug capital of North America. When I lived there 15 years ago, every neighbourhood had a grow op, even the nice ones.

  • Dan S.||

    If Congress passes the bill to allow personal drug imports from Canada, is President Trump likely to sign it? Or is his idea of American "greatness" to increase the profits of American companies, including drug companies, any way he can, even on the backs of America's sick and aged? Is that why the raid described here took place? I certainly hope I'm wrong about him on this score. Let us see.

  • J. S. Greenfield||

    I don't think it's at all certain that eliminating "parallel trading" prohibitions would be sufficient to address the problem. There have been other instances where Drug Companies have combatted exportation to the US by strictly limiting sales to levels close to the projected internal demand. If supply is tight, that's likely an effective technique to prevent pharmacies from exporting drugs to the US.

    Better to just hit this head on. Have government buyers -- Medicare, VA, etc. -- demand an MFN relative to other first-world countries, refusing to buy any medications for more than the minimum price agreed elsewhere. Drug companies can set their prices, but they won't be allowed to price discriminate in the US relative to Canada, Europe, and other rich nations.

    That should also sufficiently empower major insurers to make similar pricing demands, and ultimately drive down costs for all in the US (including cash buyers), while raising prices some elsewhere (so that all rich nations are sharing the costs to encourage innovation).

    *That* approach is far more likely to produce the projected (and desired) outcome, than to merely lift prohibitions on importation, and hope that is enough.

  • ||

    Have government buyers -- Medicare, VA, etc. -- demand an MFN relative to other first-world countries, refusing to buy any medications for more than the minimum price agreed elsewhere.

    What could go wrong?

  • Lucius Junius Brutus||

    Foreigners steal the fruits of American invention and industry, and you want to reward them. Nice. Kiss all medical innovation goodbye if one can't make a profit from it.

    Medical goods are no different than any others - you have no right to them.

  • John B. Egan||

    My ex girlfriend had to pay almost $300 a month for an asthma inhaler, which we could buy from Germay for $50. And that worked fine until our government stepped in and blocked the company we used from filling orders to be delivered to the US. The difference between a hairdresser paying $3600 a year and $600 a year shows the absolute outrageous bulshit involved in our Congress' protection of their big donors in Pharma. In fact, the 'Let Americans Buy Their Drugs From Elsewhere' Bill keeps heading to Congress and keeps getting shot down. Bernie Sanders was the last to try and it failed. Which brings up thequestion 'Just Who Does Congress Think They Represent? The 325 Million Citizens Of Our Nation, Or The Koch Brothers, Pfizer and LockHeed Martin? .. The answer is obvious.

  • swampwiz||

    The essential problem with the USA economy is that while regular-skill jobs have lost their value, important parts of the economy like housing, education & health care have continued to spiral out of control. It wouldn't be bad if those 3 costs simply got lower in price as well.

  • JFree||

    There is no such gatekeeper in the American market, and there is arguably no way to pay significantly less for branded prescription drugs because the American health care system is not optimized for comparison shopping.

    The Medicare prescription act of 2003 specifically PROHIBITED Medicare from negotiating drug prices or creating a formulary. It's sole legal role is to pay all the bills. This (and two other provisions of the legislation) was inserted by the Pharma lobbying assn. The other two provisions were to make re-imports of drugs from other countries illegal and to prohibit any 'reform' of the patenting system designed to eliminate the nonsense patent extensions. The net result is that the pharmas have the govt-granted market monopoly of patents - and govt is prohibited from engaging in the only power (monopsony) that can offset that.

    It is fucking nuts for us to have a govt-paid system for some people (retirees, poor, disabled, veterans, govt employees, etc) - and then to prohibit them from exercising Mgmt101 of those costs - so they then pass on higher costs to taxpayers.

  • JFree||

    The effect of the govt surrender of patent protection restrictions to pharma also shows how the patent system itself jacks up drug prices in the US.

    Insulin was invented in 1923 in Canada. By the 1940's, insulin cost about 7 cents (in 2016 dollars) per week per patient. The 1940's is when NPH insulin was discovered (now fully generic everywhere) - that now costs $4-15/1000iu in the rest of the world and $140/1000iu in the US (was $8-10 as recently as 2001 in the US). Why does it cost so much here? Because there is no price competition. When a new 'formulation' is created/extended (eg glargine/Lantus in 2000 or devemir/Levemir in 2005), all of them - the new and the old - jack up their prices together (like literally - prices all go up within one week every six months or so - doubling in price every 2-3 years or so). So the generic is essentially protected by these new patents - and the pharmas bribe (literally) the PBM's to pass those costs on to patients via the co-pays/deductibles.

    Even if the new forms of insulin are actually better (I doubt it but lets assume) - our system is designed to allow that patent protection to simply enable cost increases for EVERYTHING.

  • JFree||

    Everywhere else on Earth can use generics to restrain the price of patented drugs. You know - that's how the free market works too.

    And you are just stupid as usual re FDA costs. Pharma companies transfer costs around - almost completely arbitrarily - in order to avoid taxes. And since we've had high corp taxes - they have shuffled costs here to avoid profits here. That has nothing to do with ACTUAL FDA costs relative to elsewhere which are mostly all the same.

  • JFree||

    there cannot be a generic until after the patent expires. That's WHY patents exist!!

    Yeesh. You really are this stupid aren't you. Insulin was discovered 100 years ago. There is no truly generic insulin sold in the US now because of patent 'evergreening'. There are 20 or so manufacturers of different off-patent insulins in Europe. Which is why an American can go to Europe - without insurance coverage there so paying full price - and pay less than half the price they would pay here out-of-pocket with insurance. Because the negotiated prices for the off-patents affect what the patented products can sell for.

    And even if there was a generic off-patent insulin in the US, the US govt is explicitly prohibited from establishing a price it will pay for that generic (that's called negotiating) - unlike every other entity on Earth that ever purchases anything. Because apparently our govt was bought and paid for by PhRMA.

    FDA approval costs 2-3 times more than elsewhere and takes over 10 years longer.

    No it doesn't. But I'm sure you can keep repeating yourself. Try all caps next time. That's usually persuasive.

  • JFree||

    That's like using aspirin to reduce the cost of cancer drugs!

    No. It's like using aspirin to reduce the cost of pain relievers still under patent (or maybe heart attack drugs still under patent). Or like using penicillin to control the cost of antibiotics. Or generic insulin formula from 100 years ago to reduce the cost of patented insulin today. Or now - generic sildenafil to reduce the cost of patented erection meds or now-off-patent Viagra.

  • JFree||

    Ummm, how do we "negotiate" prices for a patented product?

    They aren't allowed to negotiate ANYTHING. That is why generics rise in synch with patented drugs

    Our drug prices are higher because our FDA testing is 2-3 times more costly, AND much longer before revenues begin.

    NPH was discovered in the 1940's - in Norway. It has NOTHING to do with the FDA and hasn't for decades. It has risen in price by 380% in the last decade - in the US and only in the US.

    drug manufacturers will have to recover their FDA costs from other country's (not just ours) ... those counntry's prices will equalize with ours
    The drug approval process/cost is identical in US/EU up through clinical trials (expensive part). Same drug in US gets to market about 90 days quicker than EU - so again damn near irrelevant and the opposite of what you assert as well. So drug companies do their clinical trials wherever a)the most suitable patient base is and b)where their researchers are. And every country that negotiates prices will negotiate some element of cost-recovery for ACTUAL research.
    What they won't do is reimburse marketing expenses - all those ads on TV in the last 15 years or so that do NOTHING but create junkies and have PROVEN to raise drug prices a LOT (while apparently also lowering life expectancy - fucking ignorant Americans). Yeah that would be a real tragedy if pharma wasn't able to suck on the taxpayers tit for those.

  • JFree||

    Is that good as your total ignorance of what a patent is?

    Well here's an article in a medical journal comparing the FDA and EU approval processes for both medical devices and drugs - http://bit.ly/2Cqn1UI

    But I'm sure you can keep repeating 2-3x more expensive and 10 years longer.

  • JFree||

    No conspiracy there.

    Of course not. It was a complete coincidence that Billy Tauzin created the legislation, shepherded it thru Congress, and within a year was the head of PhRMA (their lobbying group) earning $40 million over the next 5 years. Complete fucking coincidence. No corruption there at all.

  • markm23||

    Insurance companies and government health agencies negotiate by threatening to remove the drug from the list of drugs that they will pay for. That is, they have to be willing to deprive their customers with a particular condition of the optimum treatment, and for a few conditions from all treatment. Single-payer health agencies, AKA "socialized medicine" has proven quite effective at making those threats (which means they _will_ actually cut off the supply of the drug if negotiations fail), to the point that they're often paying only for a modest profit over the marginal cost of producing another unit of the drug.

    Even if the American government agencies (Medicare, Medicaid, military hospitals, the VA, etc.) were allowed to negotiate similarly, they would not be as effective in cutting the rates, because many of their patients are not as much captives of the system. Any American could just pay cash - and most Americans have more cash than Europeans, because European taxes are even higher, and their economies are generally worse. Furthermore, the mix of public and private insurance tends to make threats to drop reimbursement for a drug empty - if any other health plan pays for it, dropping it will cause a public outcry.

    The best fix is not more regulation, but less. Don't require drug companies to charge the same price for the drug to all customers, but don't aid them in maintaining different prices by restricting (re)imports of approved drugs.

  • Get To Da Chippah||

    The bill tasks the Department of Health and Human Services with identifying licensed Canadian pharmacies that have existed for at least five years and that are willing to undergo unannounced U.S. inspections, submit their products for quality control tests, and agree to a grievance resolution process.

    Why would any Canadian pharmacy agree to unannounced inspections by a foreign government?

  • swampwiz||

    Yes, let's streamline the approval process so we can have another generation of Thalidomide babies.

  • Larry M||

    >The bill tasks the Department of Health and Human Services with identifying licensed Canadian pharmacies that have existed for at least five years and that are willing to undergo unannounced U.S. inspections, submit their products for quality control tests, and agree to a grievance resolution process.

    That won't work. It conflicts with the actual business process used by legitimate Canadian pharmacies. I order each quarter from a CIPA-certified Canadian pharmacy. What actually happens is that their Canadian pharmacist validates your prescription and then requests that it be fulfilled. In my (typical) case, product made in India is dispensed and shipped directly from Singapore to me. The Canadian pharmacy never touches it. Inspect Canada all you want, but all you will find is records.

    This is really no different from Amazon accepting your money for a product which is then shipped to you from a third-party.

  • Vladilyich||

    My drug costs don't approach yours, but they still impact me severely since I'm on Social Security. I use three different eye drops and a pill twice daily for my glaucoma. My monthly costs at CVS are $179USD. The identical medication and manufacturer costs me $48CDN/month at Shopper's Drug Mart in Ontario. DUH! My annual ophthalmologist visit run around $250USD. I have a doctor in Ontario who will actually accept cash for service (it confuses the doctors in Canada to deal in cash) who charges me $45CAD for the same checkup..

    The article is correct when they state the U.S. is a global cash cow! MDs flock to the U.S. because they know they can print their own money there.

  • swampwiz||

    Hmm, the author seems to be saying that government control of health care results in lower costs; is he turning to the Dark Side? I think the existential problem with libertarianism is that its dogma dictates that the individual is empowered enough to be able to negotiation fairly with rentier entities, and that somehow the government could never do as good of a job - which of course is ridiculous in the age of Rx control and EMTALA (i.e., forcing providers to give free stuff). It now seems that the libertarians have to tie themselves in knots to try & achieve what a statist system could easily do.

    Late Capitalism!

  • sharmota4zeb||

    That $333 billion in sales in 2015 comes to about $1,000 per year for each American. This is the huge drug bill that gets everyone up in arms. It's only 2 or 3 times the annual cost of a mobile phone plan. There is room for improvement in the pharmaceutical sector, but it's not a bad price to prop up an industry that keeps extending life expectancy.

  • jerryg1018||

    The maker of Viagra has announced it will market a generic at half the $70/pill price of Viagra, The active ingredient in Viagra is a drug developed for high blood pressure called Sildenafil. It was never widely used for that purpose. One of the side effects discovered during testing was that men suffering fro erectile dysfunction could achieve erections. Thus Viagra was born selling for up to $70 a pill.
    Sildenafil sells for $1 for a 20 mg pill.
    Highway robbery.

  • I am the 0.000000013%||

    The only real answer to our medical issues is to offer sponsorship and a free ticket for our sickest people to emigrate to more socialist countries. Win win baby. Plus I won't have to deal with all the whiney sickies anymore. Win win win...

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  • John carry||

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  • thomas80901||

    I think, No! We can't depend on Canadian Pharmacies. US government should work on the medication laws and regulation. Otherwise, Americans could not afford prescriptions drugs. Although Canadian pharmacies like Medsengage help to find low price prescription drugs but we need a permanent solution for that.

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