What’s the dang deal with these cheap Canadian drugs? Will they poison you? Are we idiots to pay so much here in the US? Is the Canadian government subsidizing the medical expenses American senior citizens? There’s a lot of trash talk going on, but when you look at the macroeconomics of it, there are some straightforward truths.
First of all, we can dispense with the idea that Canadian drugs are unregulated and dangerous. This is insulting and absurd. As for subsidy, Canadian drugstores are happy to sell to Americans. They’re making money on every sale. So where is the imbalance coming from? The problem is this: drugs cost a lot of money to invent and develop, and that expense has to be paid for across all markets. But medicine is a funny business. In broad terms, Canada, like a lot of countries, legislates low drug prices; the US lets them float. If you beat down prices one place, they need to pop up somewhere else, namely the US. All this means the US is paying for the lion’s share of new drug development. Of course we can beat down prices here too, but you won’t get many new drugs that way. Profits permit research and development. It’s a very simple equation. Everybody likes cheap pills, but the drug you really want is the one that will save your life one day but has yet to be invented.
My favorite information source on the drug industry is Derek Lowe on Corante.com. Read what he has to say on this topic, including this question: “Just how many of the best-selling drugs in Canada were invented or discovered there?”