CANADA'S DRUG PRICE PARADOX
August 8, 2007
Canadians pay much more than Americans for generic drugs because government policies in Canada distort the market for prescription medicines, according to a new study by the Fraser Institute.
- In currency-equivalent terms, Canadian retail prices for generic prescription drugs in 2006 were on average 115 percent higher than retail prices observed in the United States for identical drugs.
- A previous analysis using 2003 data found that prices for generic drugs were 78 percent higher in Canada.
- Canadian retail prices for brand-name drugs were on average 51 percent below U.S. prices for identical drugs in 2006.
- In 2003, the prices for brand-name drugs was 43 percent lower in Canada on average.
- For Canadians, this means that since 2003 the cost of generic drugs has risen relative to U.S. prices, while the cost of brand-name drugs has decreased.
- In 2006 alone, federal-provincial-territorial prescription drug policies cost Canadians between C$2.5 billion (about U.S. $2.4 billion) and C$6.6 billion (about U.S. $6.3 billion) in unnecessary spending due to inflated prices for generic drugs and inefficient use of medicines.
- Over the four years from 2003 to 2006, the total amount of money wasted because of misguided prescription-drug policies in Canada could range from as high as C$20 billion (about U.S. $19 billion) to over C$26 billion (about U.S. $24.8 billion).
This data suggests that Canadians would be much better off if federal and provincial governments repealed policies that distort the market for prescription drugs, says the Institute.
Source: Mark Rovere and Brett J. Skinner, "Canada's Drug Price Paradox 2007," Fraser Institute, August 2007.
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