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Price Controls, Patents, and Cross-Border Internet Pharmacies: Risks to Canada's Drug Supply and International Trading Relations

Type: Research Studies
Date Published: February 15, 2006
Research Topics:
This study measures and analyzes the export trade in prescription drugs between Canadian Internet pharmacies and American consumers. It does not directly measure the additional value of the cross-border drug trade that also occurs between physical "brick-and-mortar" retail pharmacy locations and pedestrian consumers, nor does it consider international flows in the cross-border resale drug trade beyond Canada and the United States.

Using the most recent, detailed, and authoritative data sample yet published on the subject, this study examines the total value of the cross-border Internet drug trade between Canada and the United States over time. The value of the trade is also measured according to the location of the Internet pharmacy by province, the therapeutic classification of the drugs being traded, and the brand name or generic status within Canada of the drug products being traded. The potential for future growth in the cross-border prescription drug trade is examined.

This study also compares the patent status of the top-selling 500 cross-border Internet drugs in both Canada and the United States. The implications and risks to Canada's international trading relationships arising from findings about the cross-border patent status of the drugs being traded will be discussed.

The public policies that make the trade possible, and the economic incentives that drive it are explained. The business responses available to drug companies are explained and the risks to Canada's drug supply are assessed.

Finally, this paper documents the historical development of the trade and the special-interest politics that are encouraging growth.

This paper is divided into two sections. Section 1 describes and explains the empirical findings about the cross-border Internet drug trade between Canada and the U.S. and the economics driving it. Section 2 describes the background to the cross-border Internet drug trade as well as the special interests associated with it.
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