NCPA - National Center for Policy Analysis


October 21, 2004

The push to allow Americans to purchase cheaper pharmaceutical drugs from Canada is touted by American politicians, but the realities of allowing such a policy are largely ignored. The large influx of American purchases into the Canadian drug market would alter Canada's supply and price over time, say observers:

  • Canada's supply chain of pharmaceuticals is designed to meet the needs of 32 million people and could hardly withstand an additional 300 million Americans.
  • Canada's ability to purchase drugs from pharmaceutical companies at discount prices would likely change, as companies find ways to recoup the costs of research and development that are incorporated into the cost of American drugs.
  • Importing from several developed countries might shave one percent off of American drug spending over 10 years; however, the Congressional Budget Office reports that importation from Canada alone would barely make a difference.

Furthermore, pharmaceutical companies would likely limit the amount of drugs that Canada can purchase at a discount price, as they realize that many of them will simply be resold to the United States.

About 30 Canadian pharmacies are aware of this potential problem and have said they will not accept bulk drug orders from American state or local governments. Coalitions of pharmacists and senior citizens have also joined the movement in keeping Canadian drugs from going south, asking for a ban on drug sales to the United States by online pharmacies.

"We can't be your complete drug store," says David McKay of the Canadian International Pharmacy Association.

Source: Editorial, "Magic Blank," Investor's Business Daily, October 19, 2004; and Christopher J. Chipello, "Canadians Fear Pressure in U.S. For Drug Imports, " Wall Street Journal, October 19, 2004.

For WSJ text (subscription required),,SB109813746408948557,00.html


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