The Cost of Cheap Imported Drugs

For many years Americans have looked longingly at the cheap prices that Canadians and Europeans pay for drugs that are often almost twice as expensive in the US. Many consumers want all restrictions removed on the purchase of cheaper drugs from over the border or from overseas.

Unfortunately there are two things that most people fail to take into account. First, the drugs they would be buying from over the border or from overseas are predominately made in the US. The other thing they fail to realize is that the reason drug prices are cheaper overseas and in Canada is because those countries have socialized medicine and demand cheaper prices.

So how is it fair that people in the United States pay more for the same drug, manufactured right here in the US, than people in Canada or Europe pay for it? The answer is: It’s not fair. But what makes it unfair frequently differs from what most people think.

What’s not fair is that people in other countries pay so little and NOT that people in the US pay so much. The problem is that it costs upwards of a billion dollars to create, test, and get approval to sell a drug in the United States. That astronomical cost of a billion dollars, considered to be part of the Research and Development (R&D) budget, is one of the major contributing factors responsible for driving up the price of pharmaceutical drugs.

The simple truth of the matter is, once a drug is developed, tested and approved, the process for actually making the drug is not very expensive. However, drugs typically have only a short patent life, which means the drug companies only have a short time to recoup their billions in R&D before they lose the exclusive right to sell the drug.

That’s where Americans come in. We, here in the US, pay for the R&D cost of each drug, plus we provide the drug companies with the cash they need to begin creating, testing and getting approval for the next new drug.

Is that fair? Not really. To be fair prices would need to go up in Canada and Europe and to come down slightly in the US. This would ensure everyone was sharing equally in the true cost of each drug.

If re-exportation of cheaply-priced drugs back into the US becomes common enough that the drug companies can no longer recoup their R&D costs, one of two things may happen. Either the drug companies will stop selling drugs to Canada and Europe or, more likely, they will either stop all R&D for new drugs or they will severely cut back on their R&D.

The result would be fewer and more expensive drugs in the long run, rather than the flood of cheaper drugs that is the goal today.