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Prescription Drugs in Canada: Why Are the Prices Lower?

When we talk about the cost of prescription drugs, all countries have their policies regulating the prices. This is the reason that the same medication can be more expensive in one country and cost less in another. A lot of people, especially in the United States, wonder – why are medications cheaper in Canada? And there is an answer to this question.

Effective regulation of prices

It’s not a secret that drugs can be very expensive and this statement is especially relevant in the United States where the cost of prescription drugs is the highest in the world. It can be quite confusing why the same medications can have such drastically different prices, but it all comes down to governmental control.

In Canada, the same medications cost cheaper because of the system established by the Canadian government several decades ago. In 1987, the government created the Patented Medicine Prices Review Board for the sole purpose of making sure that the medications sold in the country remain accessible to people.

Manufacturers are the ones that suggest prices for the products they develop. It’s obvious that pharmaceutical companies want to make as much profit as possible so they increase the prices for their drugs. In some cases, the prices are completely unreasonable, and the role of the PMPRB in this situation is to negotiate the pricing. For the manufacturer, it means either decreasing the price for their medication or losing an opportunity to sell their product on the Canadian market.

One thing to note is that the PMPRB decides whether the price is reasonable for Canada based on the prices that a certain drug is sold under in other countries. This happens when a drug was approved in other countries before Canada and this factor definitely affects the prices. It’s interesting that the drug prices in the USA always affect the average price because of how high they are in most cases. This brings more profit for pharmaceutical manufacturers but isn’t great news for customers.

Price control according to the inflation rate

It’s one thing controlling the drug price when it first appears on the market and another thing is to make sure that the cost stays adequate throughout the years. In Canada, there exist price caps once a medication is sold on the market. It means that the drug price can be increased each year only in accordance with the inflation rate. In such a way, it’s impossible to buy a drug for a certain price one day and the next day for it to be significantly more expensive.

In countries without such control, such as the United States, the prices can increase suddenly and drastically without any reason or prior warning.

Because of the mentioned reasons, it’s not surprising that Canadian pharmacies have better prices for prescription drugs. While the system is not without flaws, it still works in favor of the general population and allows the government to control manufacturers and their pricing.