^Whereas Americans have been buying their medications online from Canadian pharmacies for at least a decade. Why? Because those same American-branded (though manufactured in China/India/Sri Lanka, etc.) drugs cost several times less when purchased from a Canadian outlet.
Go figure.
Not entirely true.
Prescription Drug Costs: Has Canada Found the Answer?
There are some drugs that are cheaper in Canada. True. But there are many others, that are more expensive in Canada.
Worse, there are some drugs that not available in Canada at any cost. Canadians routinely buy medications from the US, just as much as US people buy cheaper drugs from Canada.
So why are some drugs cheaper in Canada?
3 reasons.
FIRST: The Canadian government negotiates (read imposes) lower prices for some drugs.
While this may seem brilliant and slam dunk win for everyone, it is exactly because of these government imposed prices, the result in many drugs being MORE expensive than here in the US, and why some drugs simply not available.
Any basic economics course, and most free-market capitalists understand, that any time you impose price controls, you will end up with shortages (when the negotiated price is lower than market value), and price gouging (when the negotiated price is higher than market value).
After all, if the government makes the price too low, why sell the product? Just sell it in other countries without the controls. Equally, if the price is too high, why would you lower your price, when the government agreed to charge more?
Now the key is *too* low. Some prices are lower than here in the US, but still high enough to be profitable, thus are still on the market.
SECOND: The Canadian government, and other countries, pay for research and development.
Pharma companies do not do R&D in Canada
for the most part. Explicitly because of the above problem. Again, if you can't make back the $100 million dollars spent in R&D to make a pill, because the government imposed a price control..... why make the pill to begin with?
It may seem logical that if the pill costs $20 in Canada, then it should be $20 here, instead of $30. Seems logical yes?
But here's the problem. The only reason companies are willing to sell the pill that cheap in Canada, is specifically because they can make back the millions they spent on R&D, by charging more in the US, and other countries.
If America tried to impose those same price controls, the companies would stop selling the pills. Again, why sell a product if you can't make money on it?
If you doubt that, go back and read up on Romney Care in Mass. when he was governor, and tried to impose price controls. The companies didn't just except lower prices, they openly planned to end all sales of drugs in Mass. And that's a HUGE market. Why would they leave such a massive market? Because it doesn't matter how big the market is, if you can't make a profit.
Additionally, some drug companies do in fact do some R&D in Canada... but not on their own.
Centre for Drug Research and Development - Wikipedia, the free encyclopedia
It's not worth it to do their own R&D, but they most certainly will have Canadian tax payers pay for their R&D, and then sell them the resulting drugs at a profit... thanks to their tax money. For example, the Centre for Drug Research and Development in Canada, is mostly funded by government. But if you look at 'participating organizations', you'll find such for-profit companies as Pfizer Inc., and Johnson & Johnson. They have no problem with you paying taxes, funding their R&D, so they can sell you a pill.
THIRD: and finally.... Subsidies. Taxing the public, to pay drug companies, to lower prices.
While people in the US, hop on Canadian online drug shops, and admire the lower prices.... they are failing to connect those lower prices, with the higher taxes that are paid.
Those lower prices, are due to Canadians paying higher taxes, so you can get a drug cheaper. If Canadians realized how they were being charged higher taxes, so people that don't even live in Canada can get cheaper drugs, I doubt the system would still be in place.
Bottom line:
While on the surface, looking at the Canadian system through a online drug store portal, seem like it's brilliant, in reality more spotty. Shortages, higher prices, and gouging the Canadian tax payer, is how that masquerade of a low price utopia exists.