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Drug importation from Canada won’t work

I’ve mentioned this in a number of previous posts, but large scale importation from Canada won’t work to bring down US drugs prices. The US market is too large and Canada does not have the supply to meet US demand. Further, policies proposing drug importation from Canada assume that Canadians will be passive actors in this.

Well, Canadians are passive no longer.

Canada has banned mass exports of many prescription drugs. The text of the Canadian health ministry’s order is here and states:

A person that holds an establishment licence must not distribute a drug to another person for consumption or use outside Canada unless the person holding the licence has reasonable grounds to believe that the distribution will not cause or exacerbate a shortage of the drug.

Although the US is named named explicitly as the only country to which mass exporting could create a shortage, clearly US policies were the motivation behind this order. Canadians already face shortages for some drugs before any US importation would go into effect. NPR reports:

Between 10-15% of drugs are in shortage at any given time, and close to half of all marketed drugs in Canada have been in shortage at least once, according to Health Canada. The COVID-19 pandemic has made the situation worse, as demand grows for certain medications used to treat coronavirus infections, the department said. By late October, Canada had experienced 42 serious shortages, compared to about 10 shortages throughout all of 2019.
In any case, the Canadian government thinks the new U.S. rule wouldn’t do much to reduce drug prices in the U.S., since the Canadian market is small and represents only 2% of global pharmaceutical sales.

In fact, another study found that one quarter of prescription drugs in Canada already face short supply. These include shortages for medications such as EpiPens, opioid drugs, and treatments for Parkinson’s disease, schizophrenia, and depression.

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