NCPA - National Center for Policy Analysis

Canada's Answer To Prescription Drug Costs

May 22, 2000

Some prescription drugs cost less in Canada, but others don't, says William McArthur, a physician and former chief coroner for British Columbia. And many drugs are not available at any price because of the lengthy drug approval process and oppressive price controls. As a result, patients are often harmed.

  • The federal drug approval process takes 13 percent longer than in the United States.
  • For example, Viagra was not approved in Canada until a year after approval in the United States
  • Many drugs never win federal approval and cannot be purchased in Canada.

After federal approval, each province must approve the drug for its formulary. Of 99 new drugs federally approved in 1998 and 1999, only 25 were listed on the Ontario formulary. And provincial drug approval can be lengthy -- it takes nearly 500 days in Ontario.

Despite price controls, Canada has been unable to control overall drug costs. In 1988, prescription drugs cost $106 per capita; by 1996 that had doubled to $211. A study of international drug prices concluded average Canadian drug prices are higher than in the U.S. And some drugs cost far more: for example, the anti-hypertensive drug atenolol is four times more expensive in Canada.

A University of Toronto study found the main effect of price controls is that patients rely more on hospitals and surgery.

  • Moreover, 27 percent of British Columbia physicians report they have admitted patients to the emergency room or hospital because they were required to switch the patient to the cheapest drug available.
  • Sixty-eight percent report confusion or uncertainty by cardiovascular or hypertension patients, and 60 percent have seen patients' conditions worsen or their symptoms accelerate due to mandated switching.

Thus Canada has prevented Canadians from obtaining drugs that might have reduced hospital stays and expensive medical procedures.

Source: William McArthur, "Prescription Drug Costs: Has Canada Found the Answer?" Brief Analysis No. 323, May 19, 2000, National Center for Policy Analysis, 12655 N. Central Expwy., Suite 720, Dallas, Texas 75251, (972) 386-6272.

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