|
Study: Cross Border Prescription Drug Sales To U.S. Creating Shortages To Canadian Consumers |
|
|
|
Written by Wire Services
|
|
Wednesday, 15 February 2006 |
Internet pharmacies are selling off Canada's prescription drug supply to Americans, and in so doing are reducing our access to necessary medicines, according to Price Controls, Patents and Cross-border Internet Pharmacies: Risks to Canada's Drug Supply and International Trading Relations, released today by The Fraser Institute.
Canada's leading drug data agency, IMS Health Incorporated, provided the study with the largest, most reliable data sample yet published on the cross-border drug trade. The sample covered the 500 top selling products representing 92 percent of total sales through 278 identified cross-border Internet pharmacies.
The data show that despite the rising value of the Canadian dollar, cross-border drug sales remain high. As a result, drug shortages have been reported in Canada. "Such shortages could soon worsen dramatically because US demand for Canadian drug sales is on the verge of a massive 'official' expansion that would swallow our market supply of prescription drugs," warned Brett J. Skinner, author of the report and the Institute's director of pharmaceutical and health policy research.
The US Food and Drug Administration currently bans the bulk purchase of cross-border drugs for US social programs and public employees. Yet since 2002, the number of US federal and state attempts to pass legislation legalizing bulk sales of cross-border drugs has grown from 3 per year in 2002 to 84 per year by September 2005, with 16 passing.
The number of American consumers who would be legally eligible to buy Canadian drugs under these proposals is conservatively estimated to be almost 119 million, or nearly four times the size of Canada's population of 32 million.
"Unless our governments take action now, Canadian patients might soon have to compete with a much larger and wealthier group of Americans for the limited supply of drugs made available to the Canadian market. Due to the massive size of the US population and the fact that Internet pharmacies can get a higher price from American customers than from Canadians, patients in Canada will end up on the losing side of this competition," said Skinner.
The Canada-US price differences that drive the cross-border trade are the artificial result of Canadian government interference in flexible drug pricing. Federal drug price regulations and the monopsony impact of provincial drug programs-their overwhelming buying power-prohibit drug companies from making temporary price adjustments that would narrow Canada-US price differences to the point where there are no significant savings to be gained from cross-border drug purchases for Americans.
Cross-border pharmacies exploit the artificial opportunity created by these public policies. They buy at low Canadian prices and sell to Americans at slightly below the higher US prices, pocketing the difference because they know that drug makers can't do anything to stop them.
Because flexible pricing is not an option, drug makers instead restrict their supply of medicines to Canada by capping shipments at normal Canadian consumption levels. Drug manufacturers must do this because they cannot afford to have Canadian price levels "imported" to the US. The industry relies on the higher prices paid by Americans to recover the average cost of developing a new drug, which is estimated to be over $800 million (US$).
The diversion of our limited drug supply to the US by cross-border pharmacies causes shortages in Canada; a result much worse than temporary small increases in the prices of some drugs.
Skinner recommends that Canada must change its pharmaceutical pricing policies if it is to prevent the "siphoning-off of our drug supply to a much larger and wealthier group of American consumers."
"Government can't have it both ways," he said. "Either the cross-border trade must be banned or federal price regulations and provincial monopsony power must be replaced with normal market pricing in Canada. Otherwise, our drug supply will be in jeopardy."
Options for more sensible drug policy include greater consumer cost-sharing and non-universal drug programs focused only on truly catastrophic needs. Skinner concluded, "Minimizing government interference would not only make Canadians better off overall, it would also eliminate the conditions that drive the Canada-US cross-border drug trade. But if governments stubbornly cling to price controls, then the cross-border Internet pharmacies must be banned in order to protect our drug supply."
|
