Canada not to blame for higher drug prices in the United States

Canada and other countries are not to blame for higher drug prices in the United States and are not hitching a free ride on American pharmaceutical research, according to a new study co-authored by York University professor Dr. Joel Lexchin.

The study, which appears in the Oct. 22 issue of the British Medical Journal, was co-authored by Lexchin, an associate professor in the School of Health Policy & Management in York University’s Atkinson Faculty of Liberal & Professional Studies and American Professor Donald Light, of the University of Medicine & Dentistry of New Jersey.

Right: York University Professor Dr. Joel Lexchin

The American government is characterizing other industrialized countries as “free riders” and argues that price controls on drugs in such countries force Americans to pay more than consumers in other countries to fund the research needed to produce new drugs, Lexchin says, but the facts do not back that up.

Light and Lexchin examined reports and statistics from governments, independent sources and the pharmaceutical industries in the US, Canada and abroad. They point out, for example, that pharmaceutical companies in the UK invest more revenue from domestic sales in research and development than companies in the US. Despite this, drug prices in the UK are significantly below US prices and company profit levels are robust, the study says.

“Despite the rhetoric, drug companies do not do much basic research. In fact, they spend less than two cents out of every dollar in sales on basic research. They take basic research – for example, from the National Institutes of Health – and apply it to develop new drugs,” says Lexchin. “They don’t need the high prices, given that level of spending.”

Light and Lexchin also cite statistics on America’s share of world sales, its percentage of spending on research and its share of discoveries. Those figures show that – in contrast to a common misconception _ pharmaceutical research and development in the U.S. have not produced more than its proportionate share of new drugs.

The article “Foreign free riders and the high price of US medicine” is available on the British Medical Journal Web site.