Analysis: Canadian Drugs Can’t Solve High-Drug-Price Problems

Published June 1, 2005

It’s been months since the Easter Bunny completed his Sunday rounds; perhaps he will now fulfill the fantasies of U.S. politicians and make Canadian drug importation work.

Alas, Canada is no Oz with streets paved with Prozac. Unless its 32.1 million citizens start multiplying like rabbits, Canada’s pharmaceutical market will remain too small to satisfy 295.7 million Americans.

Using recently released data from IMS Health-Canada, a leading medical consultancy, I compared the top 20 pharmaceuticals dispensed in the U.S. with Canadian retail distribution of those drugs. Among these 20 drugs, I found, U.S. pharmacists filled 628.7 million prescriptions in 2004, versus 54 million in Canada, or 8.6 percent of U.S. demand.

Can’t Meet U.S. Demand

Lipitor, Pfizer’s anti-cholesterol agent, was No. 1 in both countries. Imagine that the U.S. dispatched its 82nd Airborne Division to seize Canada’s Lipitor, leaving our neighbors to fight cholesterol with Chinese herbs and Canadian bacon. Canada’s 9.75 million Lipitor prescriptions would cover just 13 percent of the 74.8 million orders filled here last year.

If the U.S. captured just one-tenth of Canada’s Lipitor, leaving Ottawa a serious but possibly manageable shortage, U.S. supplies would grow by just 1.3 percent.

Supplies Are Microscopic

Or consider Synthroid, Abbot’s hypothyroidism cure. Importing one-tenth of Canada’s supply of this No. 3-selling drug in the U.S. would boost domestic availability by only 1.8 percent.

Supplies of other drugs are even less promising.

  • One-tenth of Canada’s Zocor– Merck’s anti-cholesterol compound, No. 7 in America and No. 121 in Canada–would increase U.S. supplies by 0.23 percent.
  • A tenth of Canada’s Toprol-XL, AstraZeneca’s anti-hypertension drug (America’s No. 5, Canada’s No. 193), would boost the U.S. quantity by 0.12 percent.
  • For Pfizer’s anti-depressant, Zoloft (America’s No. 6, Canada’s No. 473), the equivalent figure is 0.05 percent.

Such microscopic supply increases would barely make U.S. prices flutter.

Worse, some drugs popular in the United States–such as Ambien, Sanofi-Synthelabo’s sleep aid–are unavailable in Canada.

“Milk is under price control in Canada and significantly cheaper than south of the 49th parallel,” notes Toronto physician David Gratzer, M.D., a Manhattan Institute senior fellow. “Would Canada be able to supply all 50 states with milk?”

Canadian Officials Opposed

Naturally, Canadian officials will not tolerate seeing even 10 percent of their drug stocks devoured by U.S. patients.

“To me, it is a matter of common sense that Canada cannot be the drugstore for the United States,” Canadian Health Minister Ujjal Dosanjh declared in a November 20, 2004 speech at Harvard Medical School. “Neither American consumers nor Canadian suppliers should have any illusions otherwise.”

Exporters Shipping Counterfeits

As Canada’s medication supplies grow tighter, some of its Internet pharmacies may ship dodgy drugs. The governments of Illinois, Kansas, Missouri, Vermont, and Wisconsin manage the I-Save-Rx Canadian drug importation initiative. According to Bloomberg News, Ontario-based CanaRx Services Inc., an I-Save-Rx supplier, is considering selling Indian inventory.

Temple University researchers estimate some 35 percent of the world’s counterfeit drugs are from India, making it Earth’s leader in phony pharmaceuticals.

“This admission of possible use of Indian drugs goes to show you what we’ve feared all along,” warned Missouri Pharmacy Association CEO Ron Fitzwater. “Internet suppliers are looking to foreign countries, some that are noted counterfeiters, for profit and are putting the health and safety of consumers second.”

Cheaper Means Less Research

“The debate over drug importation is not about Canada being able to supply the U.S. market, because it does not have the supply to do so,” says Vancouver native Sally Pipes, president of the San Francisco-based, free-market Pacific Research Institute and author of Miracle Cure: How to Solve America’s Health-Care Crisis and Why Canada Isn’t the Answer.

“It is really about American politicians wanting cheaper prescription drugs for their constituents.

“The only way that we can have cheaper drugs in America,” Pipes continues, “is through the government mandating price controls, which will destroy the research and development that are so vital to the introduction of new life-enhancing drugs for everyone.”

Rather than import Canada’s socialistically fixed pharmaceutical prices, U.S. lawmakers should ignore drug prices and work to boost Americans’ incomes so we can afford innovative, life-saving, and sometimes costly prescriptions. Tax cuts, universal health savings accounts, personal retirement accounts within Social Security, and tort reform advance this objective.

U.S. politicians should stop playing with rabbits and instead pull dynamic economic growth out of the hat.

Deroy Murdock is a columnist with Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Arlington, Virginia. He currently advises the Manhattan Institute. This article originally appeared in National Review Online. Reprinted with permission.