Canadians decide not to share their cheap drugs
Old Post: This is not a suprise.
It seems that buying cheap drugs out of Canada may not be an option for much longer (via Instapundit):
As I explained in an earlier post, drugs are expensive to buy because they are expensive to develop. Canada gets them cheaply because they've enacted price controls, but that only works because the high prices in the US subsidize the drug development. Without the money from US sales, the drug companies would not have the money to research new drugs, causing many drug companies to go under, and drug development at those that survived would slow to a crawl. Doc Rampage suggested that we might want to allow drugs from Canada, in the hopes that prices would even out. If I thought it would work, I'd say go for it, but the problem is that Canada has artificial price controls that are more likely to wreck the drug companies than fix the prices. Canada's already shown a preference for poor healthcare over high prices, and I doubt they'll act in the long-term best interest of drug development. It looks like some Canadians are already acting to fix the problem from their perspective, by simply refusing to share what they shouldn't have in the first place.
Is there anything that can be done to lower prices? It's always going to be expensive to develop drugs, and new drugs are necessarily expensive until the patent runs out and anyone can duplicate it. However, some of that cost can be reduced with tort reform and some deregulation. With something like healthcare you don't want a complete free-for-all, but FDA regulation can be excessive. And while it may seem extreme, it may be useful to limit sales of American drugs to Canadian distributors as long as the Canadian government has price controls in effect.
But then, I'm hardly an expert on this sort of thing, and I'd prefer to hear from someone who is.
Update: Speaking of bulk buying and over-regulation, it's arguable that these are the reasons for the flu vaccine shortage this year. Kevin Drum has more.
Update: Weekly Standard makes a convincing case that the flu vaccine shortage is due to the actions of trial lawyers. Also, Doc Rampage responds to my arguments.
It seems that buying cheap drugs out of Canada may not be an option for much longer (via Instapundit):
More than 30 Canadian internet pharmacies have decided not to accept bulk orders of prescription drugs from US states and municipalities.
...But growing concern in Canada that growing exports to the US could lead to rising prices and shortages north of the border has prompted the Canadian International Pharmacy Association (Cipa), whose members include several of the biggest internet and mail-order drugstores, to act. "We don't want to give Americans the impression that we have unlimited supply for them to tap into on a commercial basis," said David Mackay, the association's executive director. Americans, he added, "can't get everything from Canada. We can't be your complete drugstore".
Prescription drug prices are significantly lower in Canada than the US, because of price controls and bulk buying by the 10 provinces. Individual Americans have crossed the border for years to buy cheap medicines, but the internet and spiralling healthcare costs in the US have led to a wider movement for states and cities to sourcethe drugs they need from Canada. Several states, such as Minnesota and New Hampshire, have set up websites directing residents to approved pharmacies in Canada. Cipa members would continue to service these customers, Mr Mackay said, but would not deal with states such as Illinois and Wisconsin that have proposed turning over their entire supply system to a Canadian internet pharmacy.
As I explained in an earlier post, drugs are expensive to buy because they are expensive to develop. Canada gets them cheaply because they've enacted price controls, but that only works because the high prices in the US subsidize the drug development. Without the money from US sales, the drug companies would not have the money to research new drugs, causing many drug companies to go under, and drug development at those that survived would slow to a crawl. Doc Rampage suggested that we might want to allow drugs from Canada, in the hopes that prices would even out. If I thought it would work, I'd say go for it, but the problem is that Canada has artificial price controls that are more likely to wreck the drug companies than fix the prices. Canada's already shown a preference for poor healthcare over high prices, and I doubt they'll act in the long-term best interest of drug development. It looks like some Canadians are already acting to fix the problem from their perspective, by simply refusing to share what they shouldn't have in the first place.
Is there anything that can be done to lower prices? It's always going to be expensive to develop drugs, and new drugs are necessarily expensive until the patent runs out and anyone can duplicate it. However, some of that cost can be reduced with tort reform and some deregulation. With something like healthcare you don't want a complete free-for-all, but FDA regulation can be excessive. And while it may seem extreme, it may be useful to limit sales of American drugs to Canadian distributors as long as the Canadian government has price controls in effect.
But then, I'm hardly an expert on this sort of thing, and I'd prefer to hear from someone who is.
Update: Speaking of bulk buying and over-regulation, it's arguable that these are the reasons for the flu vaccine shortage this year. Kevin Drum has more.
Update: Weekly Standard makes a convincing case that the flu vaccine shortage is due to the actions of trial lawyers. Also, Doc Rampage responds to my arguments.
