Quotulatiousness

October 1, 2009

Canada as prescription drug “parasite”

Filed under: Cancon, Economics, Health, USA — Tags: , — Nicholas @ 08:07

I guess the discussion on medical costs got boring without bringing international issues into play. Senator Bob Corker got into it with Liberal MP Carolyn Bennett:

An American legislator called Canada “parasitic” on Wednesday for siphoning U.S. dollars to Canada with low prescription drug prices while his country does “all the innovation.”

Canada benefits financially from America’s role as a world leader in medical advances, Republican Sen. Bob Corker charged in an exchange with a Liberal MP as she testified before a U.S. Senate committee.

“One of the things that has troubled me greatly about our system is the fact that we pay more for pharmaceuticals and devices than other countries, and yet it’s not really our country so much that’s the problem, it’s the parasitic relationship that Canada and France and other countries have towards us,” the Tennessee lawmaker told Carolyn Bennett.

Canadian provinces have a financial lever that is a direct result of the single-payer model: if you want to sell your drug in Canada, you have to sell to the government monopoly for each province. The market is small, and there are only a limited number of buyers, so the best price you can get for your product will end up being the price all of the geographical monopolies are willing to pay . . . or you don’t sell into that market at all. Under the circumstances, it’s rational for the companies to sell at close to cost: the bulk of their costs are already sunk in the R&D effort and the regulatory effort to get the drug on to the domestic market.

That doesn’t make the charge any more palatable, but there’s some justice to making it.

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