Consumers in Canada spend the same percentage of their income on prescription drugs as consumers in the United States

Government policies surrounding the pricing and reimbursement of prescription drugs in Canada do not produce lower costs for Canadians compared to Americans. Despite major differences between the Canadian and American healthcare systems, the results of a recent study[1] show that consumers in both countries are spending the same percentage of their incomes on prescription drugs.

The price of generic drugs in Canada is more than double U.S. prices for identical drugs, while brand-name drugs are comparatively cheaper. In currency-equivalent terms, Canadian retail prices for brand-name pharmaceuticals decreased slightly between 2003 and 2007. In the same time frame, generic drug prices in Canada increased by 34% compared to U.S. prices. 

The authors of the study state that Canadian government policies insulate generic drug companies and pharmacy retailers from normal market forces that would put downward pressure on prices for generic drugs. A relatively freer market in the United States produces lower prices for generic drugs to encourage consumers to substitute these generics in place of brand-name drugs.

Various policies of federal, territorial, and provincial governments in Canada are designed to force patients to use generic versions of drugs. The cumulative effect of these public policies has been to inhibit the downward pressure on the retail prices of generic drug products that would occur under normal market conditions.

The principal author of the study calculates that in 2007 alone, Canadian policies aimed at regulating prescription drugs cost consumers C$2.9-C$7.5 billion in unnecessary spending, “due to a combination of inflated prices for generic drugs and inefficient substitution of medicines.” [2]