 | Highlight on Drugs | | |
Why Buying Cheap Drugs In Canada Won't Last
Nov. 21, 2003  By Harold J. DeMonaco, M.S.
Massachusetts General Hospital More Americans are buying prescription drugs from Canada to avoid paying higher U.S. prices, but it's a price break that market forces, if not laws, won't let stand. There is a law against the importing of prescription drugs from Canada, although it has largely been ignored by the U.S. Customs Service. Private citizens traveling to Canada to take advantage of lower prices have been quietly ignored by customs agents at the border. Most experts think that over 1 million Americans are now routinely obtaining prescription drugs from Canadian pharmacies. States like Illinois and even cities such as Springfield, Mass. are pushing hard for the right to purchase drugs across the border for their employees and retirees. That many people cannot go unnoticed by government regulators or by the pharmaceutical companies. Last week a U.S. District Court judge in Tulsa, Okla. ordered a popular pharmacy “middle man” to stop helping to import prescription drugs from Canada into the United States. The injunction is temporary and the company may be back in business in the next weeks and months. But the issue of importing drugs from Canada is far from resolved. While a good deal of attention has been made of the U.S. Food and Drug Administration’s position against importing of prescription drugs, the drug companies are beginning to take action of their own. Drugs are cheaper in Canada because they are sold under a set of government price controls. If drug manufacturers want to do business in Canada, they must live with the prices that the Canadian Patented Medicines Review Board sets for their products. In 1987, before price controls, prescription-drug prices in Canada were the second highest in the world (only the United States paid higher prices). Today, drugs cost 60 percent less in Canada than they do in the United States. Even most of the countries in Europe pay more than do our neighbors to the north. The price controls have been working to keep costs low, and almost all of the drugs available in the United States have been available in Canada. I expect that is about to change, however. Buying prescription drugs in Canada is only a short-term solution to the problem of prescription-drug prices. First, the American consumer is ultimately paying full price, because the drug companies have simply raised their price in the United States to make up for profits lost because of Canadian government price fixing. If enough Americans buy their drugs in Canada, the drug companies will respond by limiting drug sales to Canada in order to protect their profits in the United States. Americans buy about one-third of the prescription drugs worldwide, while Canadians buy only a little more than 1 percent. Glaxo SmithKline, the second largest drug company in the world, recently stopped selling their drugs to internet pharmacies in Canada that sell to U.S. buyers. Astra Zeneca, Wyeth and Pfizer also have now taken measures to shut off the flow of prescription drugs from Canada. Merck and Abbott are very likely to follow as well. Where will all of this go? As the drug companies continue to attack Canadian pharmacies by limiting their ability to buy product, prices will rise and drug shortages will happen. Prescription-drug prices are up over 20 percent at some Canadian pharmacies since March as a result. Some Internet pharmacies will simply stop selling to Americans to protect their business in Canada. Many in Congress are pushing to change the current laws that prevent Americans from legally importing prescription drugs from Canada. If they succeed in getting the laws overturned, the drug companies will likely respond by simply raising their prices in Canada to the same as those charged in the United States. If the Canadian government doesn’t go along, they will likely just stop selling drugs in Canada. In the long run, buying drugs overseas simply won’t work. The market in the United States is simply too large for the drug companies to give up without a fight. Harold J. DeMonaco, M.S., is senior clinical associate in the Decision Support and Quality Management Unit at the Massachusetts General Hospital and is currently a Visiting Scholar at the MIT Sloan School of Management. He is author of over 20 publications in the pharmacy and medical literature and routinely reviews manuscript submissions for eight medical journals.
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