6 ms·

I should probably do the research for myself, but is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic pric

I should probably do the research for myself, but is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US?

maximente 7y ago
i think companies can charge a lot more because individuals can't import from abroad, so this is an important step on that path
- alex_anglin 7y ago
  ... until the supply to Canadians becomes affected, making the government impose export restrictions.
  - oarabbus_ 7y ago
    It's beneficial to both parties once that point is reached.
  - londons_explore 7y ago
    Drug companies might stop selling in canada entirely to protect US profits.
    - asark 7y ago
      Drug companies only have any kind of exclusivity or advantage at the pleasure of governments. They can't go too long playing hardball or countries will just start ignoring their patents.
- rtkwe 7y ago
  Canada doesn't get lower prices because they can import drugs as individuals. They get such low prices because the Canadian government is the insurance for the whole country and has the negotiating power to actually get lower prices out of drug companies. Medicare part D in the US can't even actually negotiate for lower prices in the US! Allowing import from Canada is just a bandaid to make it seem like they're doing something about the actual problem and will only work as long as we assume the supply of Canadian drugs can absorb both it's own demand and the US demand.
  - cal5k 7y ago
    This is actually not true. Healthcare is a provincial matter in Canada, not a federal one, and there is no broad-based pharmacare program. Many Canadians have private insurance covering the cost of pharmaceuticals.
  - zjaffee 7y ago
    This isn't true, Canadian's have private insurance for pharmaceuticals that isn't a part of their broader single payer system for standard healthcare. As a matter of fact, the current proposed medicare for all bill, would go far beyond what exists within Canada in terms of coverage.
alex_anglin 7y ago
The Patented Medicine Prices Review Board [1] regulates drug prices in Canada. Politically it's easier for the US Government to look at band-aid solutions, such as this, rather than address the issue through regulation. [1]http://pmprb-cepmb.gc.ca/home http://pmprb-cepmb.gc.ca/home
MegaButts 7y ago
I am not an expert so this is an uneducated guess, but probably because it's easier to allow competition than to force lower prices on a market riddled with regulatory capture.
- adventured 7y ago
  Conceptually it's the same reason it's far easier for Trump to use executive orders to go after healthcare prices & transparency, than to go through Congress and spend years battling lobbyists only to get nowhere (bought & paid for Congress members will sabotage the efforts, or otherwise dilute it to nothing). People understandably dislike Trump. His biggest legacy is actually not going to be his obnoxious personality however. It's going to be that he has unleashed the executive order as an acceptable method of action in combating eg the ridiculous US healthcare system. Just wait until the next Democrat is in the White House. If you're big pharma or big healthcare, you better put on your seat belt.
  - michaelmrose 7y ago
    Regarding health care in practice what has actually been accomplished by said executive order? Seems extremely likely to be a whole lot of nothing.
    - adventured 7y ago
      I think you're entirely missing the point. The next Democrat President will be belligerent with the use of EOs against the healthcare industry, thanks the Trump making their use far more acceptable (Trump is flinging them around on anything and everything as he sees fit to pursue his personal agenda). They will pursue policy - such as fixing healthcare industry problems - on things they can't get through Congress, using EOs. The healthcare industry is so disliked at this point, there will be very few defenders standing up against the use of EOs in that manner. This will also likely be commonly seen in regards to environmental related issues. The next Democrat in the White House will use EOs extremely liberally toward policy in that area. Far more so than any prior Presidents have. If you're the healthcare industry what are you going to do against a large volume of executive orders each year targeting you? Good luck fighting even a small fraction of them all, executive orders are difficult and costly to turn back. And the President can just keep burying you with them. Over the last few decades the President has increasingly been given ever wider discretion to use EOs, and Congress has largely been reluctant or plain unwilling to roll that power expansion back meaningfully. If you're big healthcare, you'll be battling the 'unlimited' resources of the largest, most powerful entity in world history, good luck. It will soon become very obvious - if it's not already - that the best way to fix many of the malign parts of the US healthcare system, is through an abusive spamming of executive orders that chokes the whole thing to death and begins modifying how it all works. There is nothing that can be done to stop this approach, if a President decides to do it (Congress is very unlikely to agree to curtail the EO abuse). The healthcare industry would be on its knees begging for mercy in five minutes. Democrats should properly already recognize there is no means to go through Congress to fix the US healthcare system. They had a supermajority and couldn't come close to fixing the disaster that is the system. There is one route to go and only one. They will use it, just watch. It's the obvious path. Personally, I'm not a Democrat or Republican, more independent politically. I don't like the abusive use of EOs. At this point, given the entirely broken nature of US healthcare (and that Congress will never agree to anything that would fix it; not even remotely close), I'd support giving the next Democrat President carte blanche to obliterate the healthcare industry using executive orders. Bring it down by any means necessary.
rtkwe 7y ago
Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down. To do the same in the US would require taking on the very powerful (because they have huge piles of cash from drug prices being so high) pharma lobby and getting it past the rabidly pro business Republican party. The only real way to do it would be a) move to a more centralized insurance system to negotiate prices (did you know Medicare the largest insurance in the US can't legally negotiate the prices it will pay for drugs?) or b) have legal limits on the prices of drugs set by fiat. I'm dubious this is going anywhere, it seems like a ploy to get some talking points for the election in 2020.
- cal5k 7y ago
  Strictly speaking, this is not true. The Patented Medicine Prices Review Board does set prices based on comparable prices in other countries, but the actual purchasing happens by a wide variety of public and private payers. Most working Canadians have private insurance that covers pharmaceuticals, and each province maintains its own separate drug insurance scheme for low-income citizens. In response, pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices. Because we don't actually have a single payer for pharmaceuticals (there is no national pharmacare program), this program fails at price discovery, since the review board does not go about the actual purchasing of said drugs. The net result is that Canada has the 3rd-highest per capita drug spend in the world (Switzerland is #2).
  - Scoundreller 7y ago
    > pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices. In reality, this occurs because the “new” product is junk and no better than the cheaper generic it’s replacing. With these government-sanctioned rebates, the manufacturers save themselves the embarrassment of trying to explain why nobody’s insurance will pay for it (it’s expensive junk).
gwbas1c 7y ago
It's basic rent-seeking. From https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking > The word "rent" does not refer specifically to payment on a lease but rather to Adam Smith's division of incomes into profit, wage, and rent.[4] The origin of the term refers to gaining control of land or other natural resources. Our current regulatory environment sets up a situation where you can only buy medication from either one manufacturer, or a limited set of manufacturers, who then charge whatever they want. But, going into more detail is very political, and much more political than I think is appropriate for a Hacker News discussion.
- dv_dt 7y ago
  It's naive to think that high capital, high knowledge required industries would suddenly be in a neat price competition market if we only just stopped regulating the patents or enforcing manufacturing quality standards. Expired patents didn't keep generics manufacturers from raising prices on US consumers. And even allegedly colluding on price fixing. And removal of manufacturing QA is a recipe for flooding the market with counterfeit and ineffective drugs. Imagine if you didn't know if your cancer drug actually had sufficient active ingredients in it or any active ingredients for that matter. Individual testing at scale for something as complex as drugs is massively more expensive and fraught with distributing all sorts of failures. That is not to say we shouldn't fight for efficient regulation, and against regulatory capture.
deleted 7y ago
[deleted]
nordsieck 7y ago
> is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US? There is no simple answer to your question. Here are a few issues: 1. It is fundamentally difficult to price a good with a high fixed cost and a low variable cost. International pricing is even more difficult. 2. Different countries have different regulations around the manufacture and sale of drugs, which can add to the cost to manufacture and distribute in those countries. 3. Many countries with socialized medicine use their monopsony position to negotiate good/better prices for drugs. Sometimes this involves credible threats to ignore patents. 4. Fake drugs are a thing and are a real, serious problem. My understanding is that drugs that pass through Canada (and possibly other places) do no go through the same verification processes that drugs for internal consumption do.
- tareqak 7y ago
  For 4., I’m pretty sure Canada has a similar verification process. It’s whether or not the U.S. considers that process to be the same with in terms of standards, or a threat to whatever vested interests the U.S. verification process protects. The latter point might sound like anti-American rhetoric, but the same thing happens within the U.S. . Consider the bidding process for the U.S. military project involving Amazon, Oracle, and IBM and the latter two companies accused the process of being heavily skewed to favouring Amazon [0]. [0] https://www.businessinsider.com/heres-why-amazon-is-heavily-favored-to-win-the-10-billion-jedi-contract-2018-10 https://www.businessinsider.com/heres-why-amazon-is-heavily-...
rayiner 7y ago
Canada has lower drug prices for the same reason Wal-Mart has low prices--exercise of monopsony power: https://www.becker-posner-blog.com/2009/12/should-the-government-use-its-monopsony-power-to-reduce-the-price-of-drugs-posner.html https://www.becker-posner-blog.com/2009/12/should-the-govern.... Because the government can set prices for such a huge proportion of the demand, it can drive the price of a product from suppliers to below market prices.[1] That may or may not be a good idea. But the reason it's easier to allow imports from Canada, instead of doing what the Canadians do, is politics. The U.S. has a long history of price regulation. After FDR, the government regulated everything from the price of milk to what airlines could charge for a ticket between Chicago and New York. That regime was almost uniformly disastrous, and starting with Jimmy Carter there was a bi-partisan move to eliminate price regulation all over the economy. So there is a huge political opposition in the U.S. to anything that smacks of price regulation. Allowing imports from Canada effectively outsources the regulatory exercise of price setting to the Canadian government. So the U.S. can achieve the effect of price regulation, without having to actually admit that it's engaging in price regulation. [1] https://en.wikipedia.org/wiki/Patented_Medicine_Prices_Review_Board https://en.wikipedia.org/wiki/Patented_Medicine_Prices_Revie... > The Review Board establishes the maximum prices that can be charged in Canada for patented drugs.[1][2]
- mc32 7y ago
  Would the importation from CA incentivize local mfgs to lower prices and disincentivize importation? Barring regulation to render imports illegal of something.
- refurb 7y ago
  As others have mentioned, United Healthcare has more patients on it's plan than the population of Canada. In addition, each province of Canada has their own drug plan (some don't and people buy private insurance), so there is no monolithic entity buying drugs for all of Canada. The real reason is that the gov't simply decides what drugs are worth and then tells the drug companies. If the drug companies don't like it, then the gov't tells them they can't sell them in Canada. Think of it more like "price by fiat" than anything else.
Circuits 7y ago
Maybe I am crazy and maybe I am wrong but I am going to go out on a limb here. I think drug prices are high in the US because big pharma executives annual salary is high in the US.
paulmd 7y ago
Canada negotiates drug prices before they're approved, the US lets drug companies charge whatever they want.

I should probably do the research for myself, but is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US?

maximente 7y ago

i think companies can charge a lot more because individuals can't import from abroad, so this is an important step on that path

alex_anglin 7y ago
... until the supply to Canadians becomes affected, making the government impose export restrictions.
- oarabbus_ 7y ago
  It's beneficial to both parties once that point is reached.
- londons_explore 7y ago
  Drug companies might stop selling in canada entirely to protect US profits.
  - asark 7y ago
    Drug companies only have any kind of exclusivity or advantage at the pleasure of governments. They can't go too long playing hardball or countries will just start ignoring their patents.
rtkwe 7y ago
Canada doesn't get lower prices because they can import drugs as individuals. They get such low prices because the Canadian government is the insurance for the whole country and has the negotiating power to actually get lower prices out of drug companies. Medicare part D in the US can't even actually negotiate for lower prices in the US! Allowing import from Canada is just a bandaid to make it seem like they're doing something about the actual problem and will only work as long as we assume the supply of Canadian drugs can absorb both it's own demand and the US demand.
- cal5k 7y ago
  This is actually not true. Healthcare is a provincial matter in Canada, not a federal one, and there is no broad-based pharmacare program. Many Canadians have private insurance covering the cost of pharmaceuticals.
- zjaffee 7y ago
  This isn't true, Canadian's have private insurance for pharmaceuticals that isn't a part of their broader single payer system for standard healthcare. As a matter of fact, the current proposed medicare for all bill, would go far beyond what exists within Canada in terms of coverage.

alex_anglin 7y ago

The Patented Medicine Prices Review Board [1] regulates drug prices in Canada. Politically it's easier for the US Government to look at band-aid solutions, such as this, rather than address the issue through regulation. [1]http://pmprb-cepmb.gc.ca/home http://pmprb-cepmb.gc.ca/home

MegaButts 7y ago

I am not an expert so this is an uneducated guess, but probably because it's easier to allow competition than to force lower prices on a market riddled with regulatory capture.

adventured 7y ago
Conceptually it's the same reason it's far easier for Trump to use executive orders to go after healthcare prices & transparency, than to go through Congress and spend years battling lobbyists only to get nowhere (bought & paid for Congress members will sabotage the efforts, or otherwise dilute it to nothing). People understandably dislike Trump. His biggest legacy is actually not going to be his obnoxious personality however. It's going to be that he has unleashed the executive order as an acceptable method of action in combating eg the ridiculous US healthcare system. Just wait until the next Democrat is in the White House. If you're big pharma or big healthcare, you better put on your seat belt.
- michaelmrose 7y ago
  Regarding health care in practice what has actually been accomplished by said executive order? Seems extremely likely to be a whole lot of nothing.
  - adventured 7y ago
    I think you're entirely missing the point. The next Democrat President will be belligerent with the use of EOs against the healthcare industry, thanks the Trump making their use far more acceptable (Trump is flinging them around on anything and everything as he sees fit to pursue his personal agenda). They will pursue policy - such as fixing healthcare industry problems - on things they can't get through Congress, using EOs. The healthcare industry is so disliked at this point, there will be very few defenders standing up against the use of EOs in that manner. This will also likely be commonly seen in regards to environmental related issues. The next Democrat in the White House will use EOs extremely liberally toward policy in that area. Far more so than any prior Presidents have. If you're the healthcare industry what are you going to do against a large volume of executive orders each year targeting you? Good luck fighting even a small fraction of them all, executive orders are difficult and costly to turn back. And the President can just keep burying you with them. Over the last few decades the President has increasingly been given ever wider discretion to use EOs, and Congress has largely been reluctant or plain unwilling to roll that power expansion back meaningfully. If you're big healthcare, you'll be battling the 'unlimited' resources of the largest, most powerful entity in world history, good luck. It will soon become very obvious - if it's not already - that the best way to fix many of the malign parts of the US healthcare system, is through an abusive spamming of executive orders that chokes the whole thing to death and begins modifying how it all works. There is nothing that can be done to stop this approach, if a President decides to do it (Congress is very unlikely to agree to curtail the EO abuse). The healthcare industry would be on its knees begging for mercy in five minutes. Democrats should properly already recognize there is no means to go through Congress to fix the US healthcare system. They had a supermajority and couldn't come close to fixing the disaster that is the system. There is one route to go and only one. They will use it, just watch. It's the obvious path. Personally, I'm not a Democrat or Republican, more independent politically. I don't like the abusive use of EOs. At this point, given the entirely broken nature of US healthcare (and that Congress will never agree to anything that would fix it; not even remotely close), I'd support giving the next Democrat President carte blanche to obliterate the healthcare industry using executive orders. Bring it down by any means necessary.

rtkwe 7y ago

Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down. To do the same in the US would require taking on the very powerful (because they have huge piles of cash from drug prices being so high) pharma lobby and getting it past the rabidly pro business Republican party. The only real way to do it would be a) move to a more centralized insurance system to negotiate prices (did you know Medicare the largest insurance in the US can't legally negotiate the prices it will pay for drugs?) or b) have legal limits on the prices of drugs set by fiat. I'm dubious this is going anywhere, it seems like a ploy to get some talking points for the election in 2020.

cal5k 7y ago
Strictly speaking, this is not true. The Patented Medicine Prices Review Board does set prices based on comparable prices in other countries, but the actual purchasing happens by a wide variety of public and private payers. Most working Canadians have private insurance that covers pharmaceuticals, and each province maintains its own separate drug insurance scheme for low-income citizens. In response, pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices. Because we don't actually have a single payer for pharmaceuticals (there is no national pharmacare program), this program fails at price discovery, since the review board does not go about the actual purchasing of said drugs. The net result is that Canada has the 3rd-highest per capita drug spend in the world (Switzerland is #2).
- Scoundreller 7y ago
  > pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices. In reality, this occurs because the “new” product is junk and no better than the cheaper generic it’s replacing. With these government-sanctioned rebates, the manufacturers save themselves the embarrassment of trying to explain why nobody’s insurance will pay for it (it’s expensive junk).

gwbas1c 7y ago

It's basic rent-seeking. From https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking > The word "rent" does not refer specifically to payment on a lease but rather to Adam Smith's division of incomes into profit, wage, and rent.[4] The origin of the term refers to gaining control of land or other natural resources. Our current regulatory environment sets up a situation where you can only buy medication from either one manufacturer, or a limited set of manufacturers, who then charge whatever they want. But, going into more detail is very political, and much more political than I think is appropriate for a Hacker News discussion.

dv_dt 7y ago
It's naive to think that high capital, high knowledge required industries would suddenly be in a neat price competition market if we only just stopped regulating the patents or enforcing manufacturing quality standards. Expired patents didn't keep generics manufacturers from raising prices on US consumers. And even allegedly colluding on price fixing. And removal of manufacturing QA is a recipe for flooding the market with counterfeit and ineffective drugs. Imagine if you didn't know if your cancer drug actually had sufficient active ingredients in it or any active ingredients for that matter. Individual testing at scale for something as complex as drugs is massively more expensive and fraught with distributing all sorts of failures. That is not to say we shouldn't fight for efficient regulation, and against regulatory capture.

deleted 7y ago

[deleted]

nordsieck 7y ago

> is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US? There is no simple answer to your question. Here are a few issues: 1. It is fundamentally difficult to price a good with a high fixed cost and a low variable cost. International pricing is even more difficult. 2. Different countries have different regulations around the manufacture and sale of drugs, which can add to the cost to manufacture and distribute in those countries. 3. Many countries with socialized medicine use their monopsony position to negotiate good/better prices for drugs. Sometimes this involves credible threats to ignore patents. 4. Fake drugs are a thing and are a real, serious problem. My understanding is that drugs that pass through Canada (and possibly other places) do no go through the same verification processes that drugs for internal consumption do.

tareqak 7y ago
For 4., I’m pretty sure Canada has a similar verification process. It’s whether or not the U.S. considers that process to be the same with in terms of standards, or a threat to whatever vested interests the U.S. verification process protects. The latter point might sound like anti-American rhetoric, but the same thing happens within the U.S. . Consider the bidding process for the U.S. military project involving Amazon, Oracle, and IBM and the latter two companies accused the process of being heavily skewed to favouring Amazon [0]. [0] https://www.businessinsider.com/heres-why-amazon-is-heavily-favored-to-win-the-10-billion-jedi-contract-2018-10 https://www.businessinsider.com/heres-why-amazon-is-heavily-...

rayiner 7y ago

Canada has lower drug prices for the same reason Wal-Mart has low prices--exercise of monopsony power: https://www.becker-posner-blog.com/2009/12/should-the-government-use-its-monopsony-power-to-reduce-the-price-of-drugs-posner.html https://www.becker-posner-blog.com/2009/12/should-the-govern.... Because the government can set prices for such a huge proportion of the demand, it can drive the price of a product from suppliers to below market prices.[1] That may or may not be a good idea. But the reason it's easier to allow imports from Canada, instead of doing what the Canadians do, is politics. The U.S. has a long history of price regulation. After FDR, the government regulated everything from the price of milk to what airlines could charge for a ticket between Chicago and New York. That regime was almost uniformly disastrous, and starting with Jimmy Carter there was a bi-partisan move to eliminate price regulation all over the economy. So there is a huge political opposition in the U.S. to anything that smacks of price regulation. Allowing imports from Canada effectively outsources the regulatory exercise of price setting to the Canadian government. So the U.S. can achieve the effect of price regulation, without having to actually admit that it's engaging in price regulation. [1] https://en.wikipedia.org/wiki/Patented_Medicine_Prices_Review_Board https://en.wikipedia.org/wiki/Patented_Medicine_Prices_Revie... > The Review Board establishes the maximum prices that can be charged in Canada for patented drugs.[1][2]

mc32 7y ago
Would the importation from CA incentivize local mfgs to lower prices and disincentivize importation? Barring regulation to render imports illegal of something.
refurb 7y ago
As others have mentioned, United Healthcare has more patients on it's plan than the population of Canada. In addition, each province of Canada has their own drug plan (some don't and people buy private insurance), so there is no monolithic entity buying drugs for all of Canada. The real reason is that the gov't simply decides what drugs are worth and then tells the drug companies. If the drug companies don't like it, then the gov't tells them they can't sell them in Canada. Think of it more like "price by fiat" than anything else.

Circuits 7y ago

Maybe I am crazy and maybe I am wrong but I am going to go out on a limb here. I think drug prices are high in the US because big pharma executives annual salary is high in the US.

paulmd 7y ago

Canada negotiates drug prices before they're approved, the US lets drug companies charge whatever they want.