Healthy Skepticism Library item: 1405

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Cohen J.
Canada: Get ready to defend affordable drugs: As more Americans buy drugs on-line, our prices will be pressured to mirror theirs
The Globe and Mail 2003 Aug 26

Full text:

Recent events in the United States in the high stakes game of pharmaceutical legislation brings to mind Pierre Elliott Trudeau’s famous quip that if an elephant gets into bed with a mouse, it will be bad for the mouse, even when the elephant’s intentions are honourable.

Late last month, the House of Representatives passed legislation making it legal to reimport U.S.-made pharmaceuticals from Canada and more than 20 other countries. Politically, this was a huge surprise: The U.S. research-based pharmaceutical industry makes significant political contributions to Congress, and its lobbyists outnumber representatives. The bets were that such legislation wouldn’t stand a chance.

But if populist demand seems to have won, the war’s not over yet. And Canada may bear the U.S. elephant’s discomfort in the form of increased pressures on our health-care system — especially in terms of upward pressure on our drug prices.

The problem is that U.S. citizens have the world’s priciest prescription drugs. Mostly that’s because, unlike most other countries, the U.S. does not regulate drug prices, leaving it to the market to set prices. The differential between U.S. and Canadian drug prices is played out in the form of frequent busloads of U.S. seniors pouring into Canada for drug-buying sprees.

The Congressional Budget Office has recently warned that rising drug prices will continue to assume a large share of seniors’ incomes and noted that over the next 10 years, for the poorest U.S. seniors, drug costs will soon take as much as 25 per cent of after-tax income. One in six Americans, or 44 million people, is age 60 or older. An equal number of Americans have no health insurance whatsoever. Health care is one of the hottest priority issues among older Americans, and in survey after survey, seniors say that enacting a prescription-drug benefit is a top concern.

So for a growing number of American seniors (and consumers generally), the pharmacy of choice is Canada. All you need to do is fax in your doctor’s prescription, pay the handling and retail fees, and within days, reasonably priced prescription drugs are shipped to your home. The Web site of one Canadian-based Internet enterprise, Canada Pharmacy Express, offers American clients “up to 80 per cent off your prescription drug prices.”

Internet pharmacies are Big Business — estimates run as high as $650-million a year. Not surprisingly, international pharmaceutical companies are trying to staunch the flow of pharmaceuticals across the Canadian border.

The first to take action was GlaxoSmithKline PLC of Britain, which earlier this year initiated a corporate policy that requires pharmacies in Canada to certify that they do not sell their products to American consumers in the United States. The company threatened to cut off products to any Canadian pharmacy breaching this deal. Now other companies, including Pfizer, are following suit.

Canadians must examine what this trend means for us. We could get caught in the middle of a difficult political debate in the United States and face repercussions. Companies may threaten us with drug shortages because they do not want to sell their drugs cheaply in Canada, only to have those drugs shipped to the U.S. to cut into profits.

But one can’t deny that American consumers need access to affordable medicines; the huge growth in the Internet pharmacy area simply a result of market opportunity. Drug reimportation will be an election issue in the next presidential election. Canadians are already being called “free riders,” who don’t pay their fair share of “true” drug costs.

Soon Canadians will be able to air their views about Washington’s increasing pressure for us to raise our drug prices. The House of Commons standing committee on health plans to hold cross-country hearings this fall for its study on prescription drugs. The committee will look at issues such as rising drug costs, the control of prices, and the marketing to, and lobbying of, prescribers and dispensers.

This will be a good opportunity for us to reassert the importance of keeping drug prices manageable as part of our public health-care system. Canadians can and should stand their ground when discussing drug prices in the shadow of the elephant — regardless of how uncomfortable it is to share space with a very large neighbour.