No. of Recommendations: 1
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.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.