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Why Are Canadian Drugs Cheaper?

March 23, 2020

high drug prices

The United States has some of the highest drug prices in the world. The exorbitant cost of drugs forces many people to stop taking their medication. A recent study conducted by the Journal of Clinical Oncology showed that, "13 percent of cancer patients did not buy approved chemotherapy drugs if they had a co-payment of $10 a month, while 67 percent did not if they had to pay $2,000 or more.

Another study showed that 33.6% of uninsured citizens didn’t take their medication as prescribed. That's 1 out of every 3 people who can't afford the medications that they need.

But did you know that drugs sold in America are the same as Canadian drugs? There is typically no substantive difference between the drugs that are available in the U.S. and those available just across the border — or in many other places in the world.

A Lack of Price Controls Hurts Americans

Drugs are cheaper in Canada. That's a simple fact. This is largely due to stringent regulation in Canada that prevents drug manufacturers from charging exorbitant prices for their products. The US does not regulate drug prices. Unlike other countries, the U.S. allows drug companies to determine the prices of medication without any involvement from the government.

Prices are not regulated by the government once a new drug is manufactured and ready to sell. Instead, the decision is made by the drug companies themselves. Drug prices are then negotiated by individual insurance companies before they are sold.

Research shows that the U.S. prices for drugs are consistently higher than in European countries. Prices are six times higher than in Brazil and 16 times higher than the average lowest-price country, which is usually India. On average, Americans spend $1,200 per year on medication, which is more than anywhere else in the world.

According to an article by Alison Kodjak of NPR, "[a] report published... in the journal Health Affairs, found that the cost of brand-name oral prescription drugs rose more than 9 percent a year from 2008 and 2016, while the annual cost of injectable drugs rose more than 15 percent. The price of insulin, for example, doubled between 2012 and 2016, according to the Health Care Cost Institute. And the price of Lantus, an insulin made by Sanofi, rose 49 percent in 2014 alone, according to the University of Pittsburgh."

Pharmaceutical companies justify their prices based on the need for innovation and research, but research only accounts for about 17% of cost in drug manufacturing in America. A study was conducted by Peter Bach, a researcher at Memorial Sloan Kettering, on the 20 top-selling drugs in America.

Through extensive research, "they found that the cumulative revenue from the price difference on just these 20 drugs more than covers all the drug research and development costs conducted by the 15 drug companies that make those drugs — and then some." In other words, the revenue after the cost of research — totaling $80 billion a year — was an additional $40 billion which drug companies kept for profit. To state again, that's $40 billion in profit just from the top 20 drugs sold in America.

In other words, hiking up drug prices in the name of innovation doesn't justify the cost to consumers. Instead, when you look closely, the profit margin is grossly higher than the cost of research and development and those profits appear to be pocketed by pharmaceutical and insurance companies. Even after rebates and discounts, medications are still unaffordable and there isn't a good argument as to why the drugs cost so much in the first place.

Since there isn't government regulation to control prices of drugs in the U.S., the negotiating is left up to the insurance companies. The U.S. is unique in this way. In Canada, and most other countries, the government oversees responsibility for the provision of healthcare.
The lack of government regulation is especially problematic for citizens in the U.S. who are on Medicare.

Medicare insures over 55 million Americans over the age of 65 every year. The reason that drugs always seem to be more expensive for people with Medicare plans is because federal law prohibits negotiation around drug pricing while demanding that it make all FDA approved drugs available to those insured. In other words, the sky is the limit when deciding what to charge Medicare patients because under law, Medicare has to purchase the drug no matter what.

But everyone is affected by the rise of drug prices in America, not just the sick, elderly, uninsured or underinsured.

No Government Regulation: Why American Drugs Are Expensive

In America, citizens are required to purchase their own health insurance, except in cases where individuals qualify for government-funded policies such as Medicare, Medicaid, or the Veteran's Health Administration.

Most often, insurance policies are provided through employers causing coverage and benefits to vary greatly. A lot of the time employers provide benefit packages that come with high deductibles and poor prescription coverage, leaving employees to pay incredible out-of-pocket costs.

As a result of this heavily privatized health care system, approximately 44 million American's are uninsured or underinsured every year. This figure includes 1 out of every 5 elderly citizens.

Privatized healthcare also means that doctors are paid through private insurance companies who can also haggle or negotiate which services should be covered. But in a national health care system like Canada's, medical professionals bill the government, where the cost of services provided is heavily regulated.

In other words, because the government oversees costs, pharmaceutical companies are limited in how much they can charge consumers.

Generic Drugs: Still Complicated for Americans

While generic drugs are eventually available at a lower cost, it often takes years before they receive FDA approval. This is due to long standing brand-name patents. According to Linda. A Johnson of Business Insider, "Typically, new drugs end up with a monopoly for roughly a dozen years. Their makers generally increase their prices every year, by about 5% or more. Those increases add up and become bigger as the expiration of the patent approaches."

During the time that a drug is under patent, generic drugs cannot get approval — although they can get tentative approval with the patent pending. Currently, some of the top-selling drugs in America have been on the market for more than 15 years. Sometimes patents can last for up to 20 years.

Pharmaceutical companies always seem to find a way to manipulate their patents and threaten competitors with litigation, causing the competition to back down. This litigation reduces market competition, which is what the US system relies on in order to drive down prices.

Just because a drug is available, doesn't mean that you are getting better treatment than you would with another drug that has been on the market longer. If a drug doesn't treat an illness any differently than already existing drug, many other countries will reject it.

Affordability is another reason why a country would reject a drug.

Whereas in the U.S. they are treated like any other commodity that can be sold for profit. Since pharmaceutical companies are in control of these prices, many argue that they are taking advantage of people while they are vulnerable — and they don't care. But drug makers continue to argue that the costs are necessary for innovation and research so that Americans can lead the world in the scientific sector of new drug development.

But if this is true, then why do drugs that have been on the market for years continue to rise in price? Most research and development of a drug is complete by the time it's ready to hit the market. As competition of generic drugs increases a new brand name drugs are created, shouldn't the cost of medications decrease over time? But they’re not — they are increasing.

Canadian Drugs Are Cheaper

There's hope for Americans who are uninsured or underinsured for affording vital prescription medications. Prescriptions can be purchased through CIPA-approved online pharmacies which dispense from licensed pharmacies, including those that dispense Health-Canada approved medications. The majority of the prescriptions available in the U.S. are available through these certified online pharmacies at a reduced cost.

The CIPA is the Canadian International Pharmacy Association, an independent national organization that gives accreditation for both international and online Canadian Pharmacies. Pharmacies with CIPA approval are the safest pharmacies to purchase medications from because they adhere to strict safety standards. With a CIPA approved pharmacy, patients know that their medications are correct and are properly dispensed.

According to their website, "CIPA pharmacies follow the same prescription process as U.S. mail-order companies, requiring a valid and signed prescription from the patient's doctor or health care provider. And we provide the same quality controls and convenience as U.S. mail-order services, allowing consumers to maintain their health with name-brand pharmaceuticals delivered right to their home. This makes CIPA an immediate and credible part of the solution to exorbitantly high drug prices in the U.S."

CIPA approved pharmacies have the highest rating over any other online pharmacy. There are only 71 CIPA online approved pharmacies, and is one of them. sells prescription drugs just like ordering from a mail order pharmacy — except at a fraction of the cost. In fact, prescriptions through a CIPA approved pharmacy are often up to 80% cheaper than they are in the US.

If you're concerned about affording your medication, may be able to help. If you would like to learn more about how we help hundreds of thousands of Americans every year, please check out our customer reviews page where you will find over 350,000 customer reviews at a 4.8/5 overall satisfaction rating.

Before skipping a dose, call toll-free at 1-866-539-5330 to speak with a patient care specialist. Therapeutic consultations can be arranged with a pharmacist and all the pharmacists are licensed.

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