NCPA - National Center for Policy Analysis

The Complexities of Canadian and U.S. Drug Prices

September 5, 2001

Since there is no such thing as one Canadian or one American price for a prescription drug, policy-makers who seek to equalize Canadian and American pharmaceutical prices face an impossible task, according to a new study from the Fraser Institute.

"We hear about Americans who claim that they save money, some say up to 60 percent, by filling their prescriptions in Canada. That is very misleading because in some cases a consumer can save as much by bargain hunting at home as he can by crossing the border," says John R. Graham, the study's author.

The study examined retail prices of three patented drugs in three areas in the United States near the Canadian border, as well as three neighboring areas in Canada. The areas selected were within Washington and British Columbia, North Dakota, Minnesota and Manitoba, and New York and Ontario.

The three drugs selected are widely dispensed and used by many patients for an extended period.

Among the findings of the study:

  • The average retail prices for Celebrex and Paxil are less in the North Dakota and Minnesota area than in the Washington and New York areas.
  • The average retail price for Lipitor is less in the North Dakota and Minnesota area than in the New York area.
  • The average retail price of all three drugs (Celebrex, Paxil and Lipitor) in the Ontario area is higher than in the two other Canadian areas, although the difference is probably not financially significant for consumers.
  • High government subsidies do not ensure favorable access to prescription drugs.

Although all three Canadian provinces subsidize prescription drugs heavily, patients in the American states have better access through the non-taxable benefit of health insurance. The effect of subsidies on prices is unclear.

Source: John R. Graham and Tanya Tabler, "Prescription Drug Prices in Canada and the United States-Part 3: Retail Price Distribution," Public Policy Sources, Fraser Institute, 4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7, (604) 688-0221.

 

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