NCPA - National Center for Policy Analysis

SENIORS IN CANADA PAY TOO MUCH FOR GENERIC DRUGS

July 16, 2008

A recent Fraser Institute report, which estimated the differences in brand name and generic drug prices in Canada and the United States for the drugs most commonly prescribed to seniors (those aged 60 years and older), found significant price discrepancy.

According to the researchers, between 2003 and 2006, prices in Canada for the generic drugs increased significantly relative to prices in the United States, while relative prices for the brand name drugs most commonly prescribed to seniors decreased:

  • In 2003, Canadian seniors paid 64 percent more than American seniors for the same group of generic drugs.
  • In 2006, Canadian seniors paid 118 percent more on average than their American counterparts for the same group of generic drugs.
  • By contrast, in 2003 Canadian seniors paid 36 percent less than American seniors on average for an identical group of patented brand name drugs.
  • In 2006, Canadian seniors paid 52 percent less than American seniors for the brand name drugs.

High prices for generic drugs in Canada are caused by misguided public policies that shield retail pharmacies and generic drug manufacturers from the competitive market forces that would put downward pressure on the price of generic drugs, says Fraser.

Canada's fixed price public reimbursement system results in a virtual monopoly within particular retail pharmacy chains for a particular generic label, says Fraser.  If public drug benefit programs only partially reimbursed consumers directly at a flat percentage of the price of the prescribed drug, all drug sales would be subject to market forces, which would put further downward pressure on prices.

Source: Brett Skinner and Mark Rovere, "Seniors in Canada Pay Too Much for Generic Drugs," Fraser Forum, May 2008.

For text:

http://am.eri.ca/commerce.web/product_files/SeniorsDrugPrices.pdf

 

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