In the last couple of years, a grey market has risen
between Canada and the United States: the illegal diversion of
prescription drugs meant for Canadian patients to medically
uninsured Americans who want prescriptions at Canadian prices,
which are often much lower than those in the United States.
Although sales are currently only about US$650 million, a drop in
the bucket of America's huge prescription-drug market, this
growing business has drawn criticism from physicians,
pharmacists, community pharmacies, and research-based drug
manufacturers, and attention from legislators and regulators. On
the other hand, a growing number of American patients are taking
advantage of Canadian cross-border mail-order pharmacies to save
money on their life-saving prescriptions.
This paper looks at the cross-border mail-order pharmaceutical
trade and determines that it suffers serious flaws:
- it exists because governments in the United States have
made it very difficult for uninsured, low-income patients to
get prescription drugs at low prices;
- it can only grow with government support;
- it violates the principles of free trade, and possibly the
North American Free Trade Agreement (NAFTA);
- it is a less safe method of distributing prescription drugs
than a free market that operates with the cooperation of
research-based drug makers;
- it poses a serious risk that research-based drug makers
will stop supplying Canada with their products, which would
force the Canadian government to make difficult decisions about
its commitment to patent law; and
- importing Canadian prices generally into the United States
would reduce the profits of research-based drug makers to such
a degree that they would reduce annual investment in research
and development (R&D) by US$5 billion to US$15 billion, the
latter estimate being almost half of global pharmaceutical
R&D for 2002.
Therefore, the Canadian government must take steps to discourage
and eliminate this illegal business. Furthermore, the American
government must reduce government intervention that limits
uninsured, low-income patients' access to prescription drugs.
Both countries must undertake reforms that will allow patients
and drug makers, not governments, to determine appropriate prices
for prescription medicines.