Source: Fraser Institute

This editorial by Nigel Rawson was published in The Hills Times on June 9, 2019. Dr. Rawson is president of Eastlake Research Group, a senior fellow at the Fraser Institute, and an affiliated scholar with the Canadian Health Policy Institute.

Canadian Pharmacy Shelves Could Run Out of Crucial Medicines Due to U.S. Laws

U.S. lawmakers in 16 states have introduced bills to facilitate wholesale importation of pharmaceutical products from Canada. Vermont actually has a law on the books and the Florida and Colorado governors have signed legislation. The intention is to make lower-priced medicines available to Americans.

New state laws allowing importation would only require the approval of the federal Secretary of Health and Human Services to be implemented. Although endorsed by Donald Trump during his election campaign, federal approval for importation from Canada has not been forthcoming during his administration. However, this situation could change quickly as access to medications is shaping up to be an important issue in the 2020 U.S. election.

Importation of medicines from Canada by Americans is not new. In the early 2000s, many American seniors came to Canada to purchase drugs at lower prices. More recently, in 2017, legislation in the form of the Affordable and Safe Prescription Drug Importation Act was proposed by U.S. federal Senate and Congress members that would have allowed American wholesalers, pharmacies, and individuals to import prescription drugs from licensed Canadian sellers. Fortunately for Canada, the bill did not pass.

The pressure is greater this time around for U.S. legislators to take action about prescription drug costs as increasing numbers of Americans are struggling to access the medications they need. However, instead of directly addressing the issue of how to improve access to medicines in the United States, many politicians see importation from Canada as an easier option, despite opposition from the U.S. Food and Drug Administration on the grounds that it cannot guarantee the quality of such imports.

The large-scale transfer of Canada’s drug supply to the U.S. would rapidly empty Canadian pharmacy shelves, have a severe effect on our health system, and cause dire distress to Canadians. A 2010 study on the potential effects of American importation concluded that, if just 10 percent of U.S. prescriptions were filled from Canadian sources, Canada’s drug supply would be exhausted in less than eight months.

If importation of drugs into America from Canada were to proceed unchecked, Canadian prices would rise. More importantly, pharmaceutical manufacturers would have no incentive to replenish Canada’s drug supply when they know that it would be redistributed to the much larger and competitive U.S. market.

Pharmaceutical companies may also go further and withhold supplies from Canada. This happened in the early 2000s when supplies were denied to Canadian internet pharmacies to prevent them from undercutting the U.S. market. Whether manufacturers refuse to restock supplies or simply withhold them, drug shortages in Canada, much worse than already exist, would be guaranteed.

U.S. politicians should directly address the issue of how to improve drug access in their own country and not attempt to solve the problem by taking advantage of Canada’s health system. However, without an appropriate Canadian legal framework to prevent the large-scale exportation of drugs, nothing prevents U.S. importers from paying Canadian wholesalers a modest percentage over the Canadian price to import most or all of Canada’s drug supply.

Ottawa is presently focused on making prescription medicines more affordable to Canadians, with proposals for tighter price controls and national pharmacare that, if put into place, would make Canada a less attractive place in which to launch new innovative medicines. Tighter price controls in Canada will also widen the gap between Canadian and American drug prices and motivate more U.S. states to attempt to implement wholesale importation initiatives.

With the current popularity of proposals to import drugs from Canada among both Democrats and Republicans in multiple states and at the federal level, we need the Canadian federal government to step up now and take immediate action to prevent prescription drugs from being diverted from Canadian patients to Americans.