Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Why are drugs cheaper in Canada (and elsewhere)?
My Brain

Posted on 01/22/2004 7:29:26 PM PST by maui_hawaii

Here is my assessment:

They are not. Not in reality.

Right now you’re probably sitting there thinking, “Whoa’, that’s totally different that everything I’ve heard” or “it’s cheaper for me, so it’s cheaper”. Let me explain why I am right.

The difference is social systems (namely socialism) and trade policy. Those are the two biggest factors.

Imagine you are a drug manufacturer. What is your largest cost? Is it manufacturing? Not a chance. Your biggest cost is by far development of newer and more cutting edge drugs. The actual manufacturing could be pennies on the dollar in comparison. Quite often the actual manufacturing is farmed out to local manufacturers in the host country. They aren’t really selling the drugs across the border, but rather the know-how to a contractor…in say Canada or Europe.

Because of our system we have taken a lead in developing new drugs. The vast majority of medicine and medical practices are developed here in the US. Why? Because can afford (and do spend money on) the R&D costs.

Now let’s say you develop some really good cancer treatment drug (a fictional example) and it cost you billions in development. Because of the dominant view that drugs are developed for the good of mankind, the drug companies sell drugs in places like Canada where they literally cap what they can be sold for.

What ends up happening is the foreign markets actually in many ways drive up the costs of our prices at home, in other ways they kind of drive down prices. More of the former than latter. Let me explain that seeming contradiction.

First off, one MUST recoup costs of development. Those billions are spent on your cancer drug no matter what.

In a purely ‘Canadian’ system it would take 100 years to recoup the R&D costs of your new drug, if ever. It’s because of price controls.

If the US adopted the socialist price control system it would completely bankrupt the entire industry in less than 10 years thus making everyone worse off. It would happen also if we allow the importation of drugs. 2+2=4.

The R&D costs MUST be recouped one way or another, and the quicker that happens, the faster we get more and better drugs. We are looking at turn-over. One won’t reinvest money they don’t have or have not yet gotten back. Who will pour money into a money losing venture?

Here is how Canada (and others) drive up our drug costs: because of their system they force US consumers to foot the bill of R&D costs. Those costs are simply spread over less consumers. We have a smaller market (compared the entire world) that is the one actually paying for the R&D. Our cancer drug costs are simply not allowed to be priced in globally. They quite literally force us to pay for our own R&D and recoup the costs all by our lonesome (that THEY are benefiting from). Our companies are not allowed to price drugs internationally so that the R&D costs are spread out among more of the people that actually consume the product. We are not allowed to treat foreigners as actual market participants.

In short, the US consumer is subsidizing everyone else’s “right” to have drugs. If the global drug market was not segmented, on average the US consumer would pay 60% less and everyone else would pay 25% more.

How they drive down costs is that what little they do contribute financially does help the drug companies. It’s still though an unfair system. The international markets want something for nothing. If we cut them off from the pot we are SOBs. If we make them pay for what they get we are SOBs. It’s a lose-lose situation.

If the US companies refuse to supply their markets everyone does what China threatened to do: Go buy a few bottles in the US, reverse engineer and manufacture the drugs on their own. Then the drug companies get NOTHING and all patents are disregarded. In other words the drug companies are trapped in the system.

The US is the only place in the world where the costs of drug development can be recouped. That’s the simple truth of it. If that market goes, the whole industry dies. That is why the drug companies are so opposed to drug importation. It would in essence Canada-fy our drug market and seriously stifle the development of drugs.

We don’t want that.

Instead of complaining about the drug companies maybe we should complain about the socialism overseas. Truth is, if you are American, you are paying for some old Canadian lady’s drug bill. That’s what it amounts to.


TOPICS: Your Opinion/Questions
KEYWORDS: drugcosts
Navigation: use the links below to view more comments.
first 1-2021-4041-6061-80 ... 101-102 next last
This is a rough outline I wrote while watching the debates.

It hasn't been revised in any way and was fired off in about 30 minutes. Please try to overlook any grammar or other errors.

1 posted on 01/22/2004 7:29:26 PM PST by maui_hawaii
[ Post Reply | Private Reply | View Replies]

To: A. Pole; Paul Ross
ping

Comments?

2 posted on 01/22/2004 7:31:58 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 1 | View Replies]

To: maui_hawaii
Canada subsidizes drugs for the sheeple hence prices are lower. In the U.S. the government does not so drug companies set the price they want.
3 posted on 01/22/2004 7:36:04 PM PST by nmh
[ Post Reply | Private Reply | To 1 | View Replies]

To: MinuteGal; lelio; Brian Allen; Mortimer Snavely; Bigun; McGavin999; ETERNAL WARMING; ValerieUSA
ping
4 posted on 01/22/2004 7:36:47 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 2 | View Replies]

To: maui_hawaii
Comments?

A lot of research is financed by public grants. Also a large part of price is caused by the expensive legal requirments.

It is strange that the same people who feel sorry for the companies which could suffer losses if prices are not controlled, do not feel sorry for people who invested years of their life and tens of thousands of their in education money to see their jobs sent abroad.

Free market should work both ways.

5 posted on 01/22/2004 7:38:51 PM PST by A. Pole (pay no attention to the man behind the curtain , the hand of free market must be invisible)
[ Post Reply | Private Reply | To 2 | View Replies]

To: maui_hawaii
Throw in a few comments about the need to keep American jobs.
6 posted on 01/22/2004 7:38:55 PM PST by reed_inthe_wind (I reprogrammed my computer to think existentially, I get the same results only slower)
[ Post Reply | Private Reply | To 1 | View Replies]

To: maui_hawaii
Probably the threat of lawsuits drives the price up in the States too.
7 posted on 01/22/2004 7:39:08 PM PST by CamelRiding4U
[ Post Reply | Private Reply | To 1 | View Replies]

To: All
Do your best to shoot 'er down folks.

Don't be shy.

Give honest opinions about the question I raised.

This is designed to start a discussion about WHY things are like they are.

If any of you can show my theory to be wrong its appreciated.

With election season rolling around this might be on the ballot.

Its good to have a discussion about it.

8 posted on 01/22/2004 7:41:19 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 4 | View Replies]

To: nmh
Quite a lot of the research that the drug companies use was done using public universities and grants so to say we do not subsidize them is not entirely accurate.
9 posted on 01/22/2004 7:41:53 PM PST by DMCA (TITLE 17 Chapter 1 Sec 107)
[ Post Reply | Private Reply | To 3 | View Replies]

To: reed_inthe_wind
Why don't you make a relevant comment. That would be the first step.
10 posted on 01/22/2004 7:42:02 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 6 | View Replies]

To: maui_hawaii
Don't forget to factor in the cost of American trial lawyers. There is no legal lotto system in Canada or Mexico therefore the cost to provide heathcare services and products is much less.

Drugs would be much cheaper if drug companies didn't have to pay huge liability insurance premiums, in other words trial lawyer payments.

11 posted on 01/22/2004 7:42:48 PM PST by Reeses
[ Post Reply | Private Reply | To 1 | View Replies]

To: CamelRiding4U
I imagine thats part of the cost too. For sure. Complying is probably a big cost.
12 posted on 01/22/2004 7:43:07 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 7 | View Replies]

To: maui_hawaii
Drug companies also have to recoup the expense of advertising in the USA. Not all countries allow drug companies to advertise like they can in America.
13 posted on 01/22/2004 7:43:24 PM PST by DMCA (TITLE 17 Chapter 1 Sec 107)
[ Post Reply | Private Reply | To 1 | View Replies]

To: maui_hawaii
Good points. How about lawsuits against drug companies here in U.S.? That increases the price.
14 posted on 01/22/2004 7:43:38 PM PST by nuconvert ( "It had only one fault. It was kind of lousy.")
[ Post Reply | Private Reply | To 1 | View Replies]

To: maui_hawaii
You raised some good points. Thanks!

I particularly enjoyed this part...

source: My Brain

Classic!
15 posted on 01/22/2004 7:45:25 PM PST by CamelRiding4U
[ Post Reply | Private Reply | To 12 | View Replies]

To: DMCA
Thats the right idea...Seriously. Ask the right questions. This thread is supposed to start a REAL debate.

We offer some grants and all that, but largely the industry is NOT grant funded. Thats my opinion.

16 posted on 01/22/2004 7:45:30 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 9 | View Replies]

To: maui_hawaii
You are partially right ... but you forgot that hidden element called "Corporate Welfare". That is what angers American citizens... Why should taxpayers have to pay on both ends? Companies are subsidized to keep costs down, or so we are told. But those companies that take your tax dollars to develop those medications have to make a profit before the patent runs out and they stick it to you every time.
17 posted on 01/22/2004 7:45:57 PM PST by TidalBore
[ Post Reply | Private Reply | To 1 | View Replies]

To: Reeses
In ways they have it worse in other markets.

If the US companies refuse to supply their markets everyone does what China threatened to do: Go buy a few bottles in the US, reverse engineer and manufacture the drugs on their own. Then the drug companies get NOTHING and all patents are disregarded. In other words the drug companies are trapped in the system.

18 posted on 01/22/2004 7:46:50 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 11 | View Replies]

To: maui_hawaii
The solution is to refuse to sell to any countries unwilling to pay the same prices charged in the US market. If they steal the formulas, then slap a total trade embargo on them both ways. Ship them nothing and buy nothing from the thieves, and for good measure bar their people from coming here as illegal or legal aliens.
19 posted on 01/22/2004 7:47:40 PM PST by brydic1
[ Post Reply | Private Reply | To 1 | View Replies]

To: DMCA
Advertising...I don't know.

I still think if it costs $1billion to develop and only 1,000,000 people will use that product over the next 5 years that still equates to a 1,000 bucks a head, just for overhead.

20 posted on 01/22/2004 7:50:39 PM PST by maui_hawaii
[ Post Reply | Private Reply | To 13 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-4041-6061-80 ... 101-102 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson