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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 741459  
Subject: Re: OT:Canadian Pharmacies Hoses Kerry Date: 10/18/2004 7:41 PM
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How can an American drug company produce, package and ship a drug to a Canadian company, who then can turn around and sell that same package of drugs to an American -- figuring in all the extra shipping costs, etc. -- for less than what the American individual can buy that American-made drug right here in the USA in the first place?


It's easy.

In the US: the company adds up its marketing expense, its manufacturing/distribution expense, its development expense, and its testing expense, and prorates that over the estimated number of doses to be sold before the patent expires. And sets its price based on that total cost.

Canada's government looks at that figure and says "No. You've already done the development and testing, so if we don't pay for it you can't take it back. And because the government is pretty much the sole buyer in Canada, we'll take over the marketing (and do far less of it than you would). So we'll only pay a price based on the manufacturing/distribution cost."

Which means that the number of doses that the marketing, development, and testing expense is spread over, doesn't include doses which will be sold to Canada. (Or France, or pretty much anywhere else except the US and Switzerland.) Driving up the price in the US (and Switzerland).

If we could re-import drugs under patent that are first sold to Canada, that would be a big savings for those able to take advantage of it - and drive the price even higher for those who for some reason couldn't.

But Canada and other countries threaten that if we do something to prohibit drugmakers from selling to them at these low prices, they'll simply stop respecting US drug patents and authorize domestic producers.
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