Skip to comments.Canada deals blow to cheap US drug imports [Kerry's "plan" taking on water]
Posted on 10/17/2004 2:38:36 PM PDT by John Jorsett
More than 30 Canadian internet pharmacies have decided not to accept bulk orders of prescription drugs from US states and municipalities.
The move delivers a potentially serious setback to US politicians most notably Democratic presidential candidate John Kerry campaigning to give Americans easier access to cheap drugs from Canada.
Mr Kerry has argued that opening the US to Canadian imports could help lower the costs of prescription drugs for elderly Americans. Such reimportation has become one of the points of difference between him and President George W. Bush during the election campaign.
But growing concern in Canada that growing exports to the US could lead to rising prices and shortages north of the border has prompted the Canadian International Pharmacy Association (Cipa), whose members include several of the biggest internet and mail-order drugstores, to act. We don't want to give Americans the impression that we have unlimited supply for them to tap into on a commercial basis, said David Mackay, the association's executive director. Americans, he added, can't get everything from Canada. We can't be your complete drugstore.
Prescription drug prices are significantly lower in Canada than the US, because of price controls and bulk buying by the 10 provinces. Individual Americans have crossed the border for years to buy cheap medicines, but the internet and spiralling healthcare costs in the US have led to a wider movement for states and cities to sourcethe drugs they need from Canada. Several states, such as Minnesota and New Hampshire, have set up websites directing residents to approved pharmacies in Canada. Cipa members would continue to service these customers, Mr Mackay said, but would not deal with states such as Illinois and Wisconsin that have proposed turning over their entire supply system to a Canadian internet pharmacy.
Cipa members make up about a quarter of the roughly 150 internet pharmacies operating in Canada, raising the question whether others will follow its lead. Mr Mackay said discussion had been heated at an all-day meeting of Cipa last month at which the new policy was approved. With pharmaceutical manufacturers seeking to restrict supplies and the US Congressional Budget Office recently saying that reimportation from Canada would have a negligible impact on US drugs spending, the internet pharmacies have already had difficulty meeting demand from south of the border.
Several have set up alliances with pharmacies in other countries. A sharp rise in the Canadian dollar has also squeezed profits.
Ujjal Dosanjh, Canada's health minister, said over the weekend that he was not concerned at this point either about domestic shortages or the safety of Canadian medicines.
Still, public opinion appears to be gradually turning against the online operators. Canadian Treatment Action Council, a lobby group representing pharmacists and patients, is due to speak out today against drug exports to the US.
This also torpedos a fantasy California has for doing the same thing. The legislature passed a bill to allow Canadian imports, but Arnold vetoed it. No doubt it'll be back in the next legislative season; no legislative fantasy ever dies in California.
Canadien, non-fda approved, outsourced drugs. john edwards' legal buddies are going to have a field day with this stuff. Talk about a 139 billion windfall to your buddies?
I hope they legalize cross-border sales. The Canadian discount is in effect an American subsidy. Erasing the border won't lower US prices, it will raise Canadian prices to US levels.
The writing was clearly written on the wall. It was only a matter of time before the lawer scum in America hired litigators in Canada to take what little profit they make.
The first guy to die from a Canadian Viagra induced heart attack will open the doors to a whole new gold field.
Is it legal for an individual to buy drugs from Canada over the internet?
Actually they'd still be walking on all fours.
"If drugs routed through Canada put a big crimp in drug company profits, they will just stop selling in Canada."
Exactly......this just shows the inability of the liberal mind to understand the law of supply and demand.
All that these "buy it from Canada" proposals will do is make sure that, through market forces, the price of drugs in Canada will be EXACTLY the same as those same drugs purchased in the US......If that means the prices go up, then the Canadian government will stop it asap.
That, or the companies will bargain harder with Canada's National Health system. If the choice comes down to paying more or going back to applying leeches, I suspect they'll pay more. The only concern I'd have is the socialists up there deciding to break the drug company's patents and produce the drugs themselves. I'd like to see what the "import the cheap drugs from Canada" folks would do then. Would they support importation if the drugs are knockoffs that infringe US firm's intellectual property?
I knew this was going to happen. Canada brought enough drugs for their population plus contingency. Its system cannot handle 280 million US citizens/consumers. Even if Canada decides to buy enough drugs at cut rate prices for US and Canada, the combined market will cost the US drug companies too much, that they may decide to abandon Canadian market to the competition.
The problem with that is, Canada can vote to not honor the drug companies` 10 year patent on the formula for the drugs. Then they break down the formula, create generic drugs using the name brand compound, and kill the major pharamceutical company`s profit. Any country can do it, though, so far, all still honor 10 year patents. We in effect already subsidize the world healthcare system, we pay for all the R&D costs as well as the cost of materials and advertising.
I have been wondering about the meds in Canada and if they are the same formulation as the ones in the USA. We bought a bottle of Benadryl when we were there recently. I took a dose of it a week ago, and it does not taste like the Benadryl that we have been buying for the last ten+ years. It tastes like paregoric(sp?) that my father used to give me when I was a child, and I've heard that prescription drug is no longer sold or has been changed for some reason.
Socialism is killing the Golden Goose...the IDIOTS!
The short run impact of grey market imports of Canadian drugs is lower prices.
The long run impact is that drug companies will no longer develop new drugs, because they will be unable to recover their development costs.
The reason drugs are less expensive in Canada, is the fact that they have capped the price they will pay for pharmaceuticals. American drug companies have already developed and tested the drugs, which constitutes a huge fixed cost - in other words, the costs that do not vary based on how many pills they sell. Now all they face is the variable cost of production, which generally drops the more they sell.
Consider the following example: Supposed you spent ten million dollars developing a drug, including research, testing on animals, testing on people, approval from the FDA, and all the other costs. Now you have an asset - a drug patent. You are also ten million dollars in the hole - that's how much you have to make before you show a profit. Would you:
-Sell one million pills a year in the U.S. only. These one million pills cost $1.25 to produce, but you can sell them in the U.S. for $2.00 each. You will have two million dollars in gross revenue. The pills cost $1.25 million to produce, and you have a margin contribution (that portion of revenue that can be applied to recovering the investment and servicing the debt) of $750,000.
or, would you:
-Sell one million pills in the U.S. and an additional hundred thousand pills in Canada. Because you are making more pills, your production can be more efficient, so they cost $1.20 each. However, you can only sell the pills in Canada for $1.50 each. Gross revenues in this scenario are $2,150,000. Production costs are $1,320,000 so the margin contribution is $830,000 - 11% more applied directly to the debt you incurred developing the product.
That pretty closely approximates the current situation. Now, suppose all your U.S. customers bought drugs in Canada - What would that do to your margin? Instead of $830,000, you would have $330,000 left over after you paid for the costs of producing the drugs. You still have to service the debt on the $10 million you borrowed (or got from shareholders - basically the same thing, for the purpose of this example) How long do you think capital would continue to flow to the pharmaceutical industry in that kind of world?
We have the best medicine in the world in this country, and the rest of the world benefits. If we were to attack the pharmaceutical industry in the name of lower costs today, we would find that there were no new drugs tomorrow.
The Canadians fix the price and the drug companies pass the loss on Canadian sales to the US market in the form of higher prices. So Sen. Kerry, explain to me how this plan will work in the long run?
Ditto, No one seems to get that. Canada is not going to subsidize drugs for the United States.
doesn't the WTO have provisions for intellectual property violations of this type?
They should. Honestly I don`t know, going by what I hear on conservative radio Canada could do it, that`s partly why they get their meds so cheaply now. Medicinal Blackmail.
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