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> But that's the whole problem. Canada presumably doesn't want to subsidize U.S. citizens. Well, right now the US is effectively subsidizing Canadians, because

> But that's the whole problem. Canada presumably doesn't want to subsidize U.S. citizens. Well, right now the US is effectively subsidizing Canadians, because the US is funding the majority of the pharmaceutical research that produces the drugs they consume. Half of the entire world's funding for pharmaceutical research comes from the US. A large chunk of that is funded by earnings on pharmaceutical sales[0][1]. > If Canada subsidizes a popular but expensive drug so that it costs $1 for Canadians This is kind of a moot point, because Canada doesn't do that. > It will happen for as long as the manufacturer resists. I don't understand what you mean by "resist". If reimportation were permitted, the manufacturer literally has no power to prevent cross-border trade. In your hypothetical scenario, yes, Canada would probably adjust the degree to which they subsidize their drugs, but that's a moot point because they're not actually doing that. [0] and again, most of that come from the US, because earnings will be higher where the sale prices are highest [1] http://www.slate.com/articles/news_and_politics/explainer/2000/05/why_do_drugs_cost_less_in_canada.html http://www.slate.com/articles/news_and_politics/explainer/20...

kbenson 10y ago
> I don't understand what you mean by "resist". Resists changing the price in the country that is imported into. Let's consider this hypothetical scenario. A popular drug is sold for $100 in the U.S., but the Canadian government subsidizes it to the degree that Canadians pay $50 for it (and Canada has negotiated a price of $80). The drug can by and is imported into the U.S. and sold for $60. There is no incentive for the manufacturer to lower the price. Even if they lower it to $80, they are losing out on some purchases who choose to buy at the higher price. They either make $80 or $100 depending on where they sold, but for ever unit that is imported, Canada is losing $30, which is partially going to subsidize the price for U.S. citizens, and partially to import/export costs. With open export regulations on drugs, there is effectively no way to subsidize a drug for your own citizens without subsidizing it for others where it is lower than another country that allows importation as long as the combined import fees and subsidized cost are not more than the cost in the importing country.
- chimeracoder 10y ago
  > Resists changing the price in the country that is imported into. If they don't, then people will just import drugs from the cheaper source, as long as it remains cheaper. Which amounts to the same thing. > With open export regulations on drugs, there is effectively no way to subsidize a drug for your own citizens without subsidizing it for others where it is lower than another country that allows importation as long as the combined import fees and subsidized cost are not more than the cost in the importing country. Correct. And on the flip side, there is no way for one country to force the other to subsidize its share of medical research, by purchasing the drugs at a price that doesn't cover R&D. Currently, that's what is happening. Pharmaceutical companies don't complain too much, though, because they can still make up the difference off of their largest customer: the US. If they couldn't, then things would be very different. The US is the largest consumer of patent-protected drugs, by a huge margin. It also funds half of all medical research worldwide, the benefits of which are then available to all countries, even though most pay rates that wouldn't sustain that level of research. There's a reason that even most European pharmaceutical companies get the bulk of their research funding from the US. Any solution which reduces drug prices in the US will inevitably result in either other countries that recognize US parents having to pay more, or total medical research funding dropping, which affects all countries worldwide. Realistically, it'll probably be some combination of both.
  - kbenson 10y ago
    I think fundamentally what we have here is the collision of socialism and capitalism, and I'm not sure how to make those work at the margins where they meet. Government funding of research is socialism, but selling the developed drugs is capitalism, and selling them outside the funding country without an increase in price costs the funding country. I'm not sure what the research on this topic says, but I suspect the solution is moving the demarcation of socialism and capitalism to a more acceptable point, as much as that makes sense. For example, instead of freely funding development, if the government got some ownership stake in the drugs developed with some of their funding, as profits as well, then any gain from their own citizens or the citizens of other countries would go towards teh budget, and thus the good of the citizens of the funding government. I guess the real question is how do you mix capitalism and socialism in a way that eliminates, or at least reduces the friction caused where they push up against each other?

kbenson 10y ago

> I don't understand what you mean by "resist". Resists changing the price in the country that is imported into. Let's consider this hypothetical scenario. A popular drug is sold for $100 in the U.S., but the Canadian government subsidizes it to the degree that Canadians pay $50 for it (and Canada has negotiated a price of $80). The drug can by and is imported into the U.S. and sold for $60. There is no incentive for the manufacturer to lower the price. Even if they lower it to $80, they are losing out on some purchases who choose to buy at the higher price. They either make $80 or $100 depending on where they sold, but for ever unit that is imported, Canada is losing $30, which is partially going to subsidize the price for U.S. citizens, and partially to import/export costs. With open export regulations on drugs, there is effectively no way to subsidize a drug for your own citizens without subsidizing it for others where it is lower than another country that allows importation as long as the combined import fees and subsidized cost are not more than the cost in the importing country.

chimeracoder 10y ago
> Resists changing the price in the country that is imported into. If they don't, then people will just import drugs from the cheaper source, as long as it remains cheaper. Which amounts to the same thing. > With open export regulations on drugs, there is effectively no way to subsidize a drug for your own citizens without subsidizing it for others where it is lower than another country that allows importation as long as the combined import fees and subsidized cost are not more than the cost in the importing country. Correct. And on the flip side, there is no way for one country to force the other to subsidize its share of medical research, by purchasing the drugs at a price that doesn't cover R&D. Currently, that's what is happening. Pharmaceutical companies don't complain too much, though, because they can still make up the difference off of their largest customer: the US. If they couldn't, then things would be very different. The US is the largest consumer of patent-protected drugs, by a huge margin. It also funds half of all medical research worldwide, the benefits of which are then available to all countries, even though most pay rates that wouldn't sustain that level of research. There's a reason that even most European pharmaceutical companies get the bulk of their research funding from the US. Any solution which reduces drug prices in the US will inevitably result in either other countries that recognize US parents having to pay more, or total medical research funding dropping, which affects all countries worldwide. Realistically, it'll probably be some combination of both.
- kbenson 10y ago
  I think fundamentally what we have here is the collision of socialism and capitalism, and I'm not sure how to make those work at the margins where they meet. Government funding of research is socialism, but selling the developed drugs is capitalism, and selling them outside the funding country without an increase in price costs the funding country. I'm not sure what the research on this topic says, but I suspect the solution is moving the demarcation of socialism and capitalism to a more acceptable point, as much as that makes sense. For example, instead of freely funding development, if the government got some ownership stake in the drugs developed with some of their funding, as profits as well, then any gain from their own citizens or the citizens of other countries would go towards teh budget, and thus the good of the citizens of the funding government. I guess the real question is how do you mix capitalism and socialism in a way that eliminates, or at least reduces the friction caused where they push up against each other?