NCPA - National Center for Policy Analysis

SAME SPENDING, DIFFERENT ACCESS

May 14, 2008

When it comes to prescription drug policies, governments in the United States tend to be more oriented towards competitive markets while the governments in Canada tend to be more interventionist.  There is a common misperception Canadian prescription drug policies tend to produce lower overall costs for consumers than American prescription drug policies.  However, a recently published Fraser Institute report shows that the average personal cost burden of prescription drug spending is roughly equivalent in both countries.

For example:

  • In 2006, the per capita spending on prescription drugs was 1.5 percent of per capita GDP for Canadians and 1.6 percent for Americans.
  • In the same year, Canadians spent 2.5 percent of their personal disposable income on prescription drugs, while American spent only 2.2 percent.
  • Also, the number of prescriptions dispensed per capita in both countries was approximately the same, 13 prescriptions per person in Canada compared to 12.3 per person in the United States.

The fact that the personal cost burden of prescription drug spending is roughly the same for Canadians and Americans is partially explained by differences in the prices of patented and generic drugs:

  • Patented brand name drugs in Canada are on average about 51 percent less expensive than in the United States.
  • Generic drugs in Canada are about 115 percent more expensive on average than the same generic drugs in the United.

Although Canadians and Americans share approximately the same cost burden for prescription drug spending, Americans are better off because research suggests that U.S. consumers have better access to new innovative drugs than Canadians do.  Canadians who rely on public drug programs suffer longer delays to access many new medicines than Americans, and are in many cases not able to access the same number of life-saving and life-improving drugs that are more commonly available to Americans, according to Fraser.

Source: Brian J. Skinner and Mark Rovere, "Same Spending, Different Access," Fraser Forum, March 2008.

 

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