Government intervention in prescription drug markets in Canada produces no overall cost-savings for consumers, compared to relatively more free market-based policy approaches in the US, concludes a new report from the Fraser Institute, a Canadian free-market think tank.
While much of Canada’s prescription drug policy is based on the assumption that greater government intervention in the market such as regulation of drug prices provides more affordable access to drugs, the research shows that, on average, these policies have not resulted in personal advantages for Canadians compared to US consumers, says Mark Rovere, associate director of health policy research at the Institute.
Moreover, if other indirect factors are taken into account, there are probably net socioeconomic costs associated with government intervention, adds Mr Rovere, who co-authored the study.
The report examines per-capita spending on prescription drugs by Canadians and Americans in 2009, the most recent year for which data is publicly available. The results indicate that, in both nations, spending on prescription drugs stood at 1.7% of per-capita Gross Domestic Product (GDP).
As a percentage of after-tax income, individual spending on prescription drugs in Canada was slightly higher, totaling 2.6% of per capita personal disposable income, compared to 2.3% in the United States.
The report also found that the number of prescriptions dispensed per capita was roughly the same in both countries last year, at 14.2 prescriptions per person in Canada versus 12.7 in the US.
Although per-capita incomes are higher in the US than Canada, one of the main reasons prescription drug spending is virtually identical between the two countries is because Canadian consumers pay more than twice as much for identical generic drugs than Americans do, says Mr Rovere.
“The price differential in generic drugs offsets any potential cost-savings consumers could have enjoyed from the availability of lower-priced brand-name medicines in Canada,” he notes.
A previous study co-authored by Mr Rovere stated that, in 2007, Canadian prices for generic prescription drugs were, on average, 112% higher than US prices for identical products, while at the same time Canadian prices for brand-name prescription drugs averaged 53% lower than American prices.
US policies that rely more on markets to determine pharmaceutical prices provide Americans with access to more new drugs than Canadians, he concludes.