Policy Documents

The High Price of Cheap Drugs

Russell Roberts –
June 1, 2004

The lure of an alleged free lunch can be irresistible.  Even a lunch at reduced prices is hard to ignore.  This human desire for a bargain is part of America's persistent interest in buying pharmaceuticals in Canada. 

It seems so simple.  Canadians pay less for prescription drugs than Americans.  Why pay more when you can pay less?  So a lot of Americans are jealous of what appears to be a good deal for Canadians.

Usually, this situation would solve itself naturally--Americans would import drugs from Canada rather than pay a premium for drugs in America.  It's not like American drugs are higher quality or have some other attribute that would justify the higher  price.  They're the same product--they arrived in Canada from America.  Only a fool would pay a premium when he can get the same thing cheaper elsewhere.

There's only one problem.  It's against the law to import drugs from Canada.  This should be an easy problem to fix.  Let Americans import drugs from Canada.  Americans get inexpensive drugs, so everybody should be better off, except the drug companies.  And we know the drug companies have lots of money already, right? So although the drug companies will be upset, allowing drug re-importation should be wildly popular among seniors and the rest of us who care about them.