NCPA - National Center for Policy Analysis

CANADIAN SENIORS PAYING TOO MUCH FOR GENERIC DRUGS

July 8, 2005

A new study by the Fraser Institute concludes that Canadian prices for brand-name drugs are lower than American prices but the cost of generics is much higher in Canada.

Researcher Brett J. Skinner examined three separate lists of drug products: the top 100 brand-name products, the top 100 generic drug products and the 100 most recommended drug products for consumers 65 and over.

His findings for Canadian seniors and generic drugs:

  • Canadian prices for the 22 generic active ingredients among the most recommended drug products for seniors averaged 64 percent higher than those in the United States.
  • Twelve of the 22 were more expensive (by 49 percent on average) in Canada; 10 of the 22 were less expensive (by 37 percent on average) in Canada.
  • Of the drug products most recommended for seniors by their physicians, 95 had generic versions available in Canada.

His findings for Canadian seniors and brand-name drugs:

  • Canadian prices for the 56 brand-name drugs among the most recommended drug products for seniors averaged 36 percent lower than those in the United States.
  • Fifty-one of the 56 were less expensive in Canada (by 43 percent on average); 5 of the 56 were more expensive in Canada (by 33 percent on average).

Furthermore, it is not surprising that Canadian seniors pay less for brand-name drugs because the average income in Canada is lower than in the United States. What is surprising is that Canadians are paying so much for generic drugs, says Skinner.

The cause of this discrepancy: the lack of a competitive market for pharmaceuticals in Canada. The government has given special rights and advantages to generic companies that allow them to establish individual product monopolies on retail pharmacy shelves through exclusive distribution agreements, he adds.

Source: Brett J. Skinner, "Seniors and Drug Prices in Canada and the United States," Fraser Institute Digital Publication, May 2005.

 

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