Shocker: our drugs aren’t cheap at all

We pay more for drugs than any Western country except the U.S.

Compared to the U.S., drug prices here in Canada seem pretty low. Certainly the Americans who were ordering our pharmaceuticals over the Internet a few years ago seemed to think so. But a new study has found that both Canadians and Americans pay much more for their drugs than any other Western country.

The Paris-based Organisation for Economic Co-operation and Development (OECD) found that the average Canadian spends US$589 per year on drugs, while the average American spends US$792. Both figures are far above the US$404 OECD average. The study found that retail prices for patented drugs in Canada are 25 per cent higher than relative prices across the other countries. For generic drugs—medicines no longer covered by patents—our costs are a shocking 70 per cent above the average.

So why do we pay so much more than the rest of the world?

One possibility is that we are one of only four countries (along with the U.S., Poland and Mexico) without a national pharmacare program. This fact was briefly an election issue, with both the NDP and Liberals promoting federal drug plans in their respective platforms.

However, the OECD report fingers “regulatory failures and lack of competition” at provincial drug boards as the main reason for Canada’s high generic-drug prices. Brett Skinner, director of pharmaceutical research at the Fraser Institute in Toronto, agrees. He says the best way to lower drug prices in Canada is not by launching a pharmacare program, but by opening the generic market to more competition and relaxing government price controls.

“We overpay for generics as a result of government policy,” he says. “We don’t need another government program to fix it.”

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