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?
Not exactly. See my example above.
The issue is that the cost of production does not equal the cost of the drug, so it makes sense for the drug company (and for U.S. consumers, as well) to sell the drug for anything above the marginal cost of production.