Canada’s Heavily Regulated Health Care System Saves Money on Drugs — NOT

One supposed benefit of socialized medicine is access to low-cost medicines, right? A new study by the Fraser Institute highlights some important facts when comparing the U.S. and Canada.

By observing per capita drug spending as a percentage of per capita income the study compares the average personal affordability of drug costs for Canadians and Americans.  The method provides a way to estimate the actual economic burden of prescription drug costs on consumers in Canada and the United States relative to the differences in living standards.

  • Consumers in Canada and the United States spend nearly the same proportion of their per capita gross domestic product on prescription drugs (1.6 percent in Canada and 1.8 percent in the United States) and of their per capita personal after-tax income (2.5 percent in Canada; 2.3 percent in the United States).
  • The number of prescriptions dispensed per capita in both countries is roughly similar (14.9 in Canada; 12.9 in the United States).

Why is the personal affordability of prescription drug spending roughly the same in Canada and the United States?

  • While brand-name drugs in Canada are significantly cheaper on average than in the United States, generic drugs in Canada are about 90 percent more expensive on average.
  • Americans also tend to substitute lower-cost versions of drugs for relatively more expensive brands more often than Canadians; and per capita after-tax incomes are higher in the United States than in Canada.

The Canadian government’s greater intervention in prescription drug markets offers no affordability advantages for consumers compared to competitive markets in the United States.

And guess what – the higher prices paid for brand name drugs funds the research necessary to discover new, more effective drugs.



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