Why Do Drugs Cost Less in Canada?

In Canada, drugs costs less than that in the US. This is simply because of price control; the Canadian government authorizes a review board that orders price reductions if the median price of the drug has exceeded that of the prices in the United States along with six other countries in Europe.

Though the countries in Europe are doing measures to regulate drug costs, Canada takes advantage on the methods these countries do to control the drug prices.

It has been noted that the same is not done in the US because of the fact that drug manufacturers are eager to sell their products to Canada for less and sell for more in North America. This is termed as price discrimination. The manufacturers of a product, say a pill, charge various prices to various countries.

Since drugs are easy to manufacture but are costly to develop, price discrimination arises. For companies to recoup the costs of research and the development of the drug, they charge high costs in the United States and make profits in other countries like Canada.

Way back in 2000, the US Congress introduced a bill stopping drug discrimination. This is by re-importing the drugs in Canada or Mexico or having the drug manufacturers in the US to offer the drugs at a single price.

But since there is the issue regarding costs in research and development, the price will have to be higher in Canada. Consequently, it will be lower for the U.S., forcing Canada to alter its price controls. Otherwise, Canadian citizens will not be able to purchase it.

It is true that price discrimination poses a certain amount of unfairness to a certain nation of any country. Mexico is a good example when it comes to this matter. Many Mexican people are unable to afford high-priced drugs.

Still, the key is that the expenses that go to research and development. If it comes at a lower price, then the drugs themselves can come at a reduced price.

This may give Mexicans as well as poor nations like Africa to buy drugs at a lesser price. At the same time, those drugs may be sold at a cheaper price in the US.