Today, the Trump administration laid out a plan to allow states, drug wholesalers and pharmacies to import some cheaper drugs from Canada. While at first glance many may believe that this approach would lead to large decreases in drug prices, in practice the impact on prices is likely to be modest. In a Washington Times interview today, I provide the rationale.
“The Canadian market does not have enough drugs to meet U.S. needs,” said Jason Shafrin, senior director of policy and economics for Precision Xtract. “The U.S. population is more than nine times as large as Canada‘s, and total U.S. pharmaceutical market is 20 times as large as Canada‘s. Even if only 40% of U.S. prescriptions were filled by imports from Canada, the Canadian drug supply would be exhausted in 118 days.”
“Further, drug companies are likely to respond to drug importation by either raising prices for their drugs in Canada or deciding not to enter the Canadian market at all,” Mr. Shafrin said. “While many politicians claim that importing drugs from Canada has the potential to bring down drug costs, in practice it is not a long-run workable solution.”
I had made similar arguments in my blog post titled “Why drug importation from Canada won’t work“, which was published last month.