Importing healthcare: Can the U.S. muscle in on Canada’s drug care?

On July 24 of this yearU.S. Health and Human Services Secretary Alex Azar announced an ambitious plan designed to shake up the country’s pharmaceutical system. The scheme would allow Americans to legally import approved prescription drugs from Canada at a price lower than the US list price. A bold move, to say the least, in a country where powerful pharma lobby groups spent a record $27.5 million in 2018 to maintain a monopoly in what is arguably the world’s most profitable drug market. 

In the U.S., the news was met with cheers (and jeers) from a few politicians and applause from a smattering of advocacy groups, like the AARP. In the following weeks TV pundits and news organizations debated how the proposed policy change would affect American consumers. Often left out of the conversations, however, was what this news meant to Canadians.  

The reception north of the 36th parallel was, to put it mildly, different. Azar’s announcement blindsided Canadian officials who issued a terse retort to the U.S. in a prepared statement. “While we’re aware of ongoing state-led initiatives to import Canadian drugs, we weren’t consulted on specifics,” the office of Health Minister Ginette Petitpas Taylor said.  

A joint statement issued by the Canadian Medical Association and several other groups blasted the move in less diplomatic terms, saying that “[h]ospital and community pharmacies in Canada are resourced to serve the Canadian public…They are not equipped to support the needs of a country 10 times its size without creating important access or quality issues.” In other words, Americans should solve the problem at home before knocking on Canadian doors.  

For years pharmacies and doctors have complained about drug shortages in Canada, which can be traced back to everything from manufacturing problems to high demand. In 2016, the federal government implemented new regulations that would force manufacturers to report drug shortages and discontinuations through the site Drug Shortages Canada, but that hasn’t solved everything. The type of plan pitched by the Trump administration would strain a system already feeling the pinch. Indeed, not only would this measure lead to a dramatic rise in drugs exports out of Canada. According to Stephen Amato, the director of Northeastern University’s Masters program in Regulatory Affairs, there also concerns that US pharmaceutical manufacturers may stop shipments of certain drugs to the Canadian market if the measure is implemented”.  

Experts like Rosalie Wyonch, policy analyst at C.D. Howe Institute, understands why Canadians might be worried. For her perspective, however, seeking out drugs from Canada is only a bandaid solution for the U.S., meaning that they will have to look beyond Canada in the long term “..Why [is] the U.S. is looking to import drugs from Canada specifically or other countries that have lower prices when  it’s fully within their power to regulate the prices domestically,” she explained. “And part of the reason that drugs are actually so much more expensive in the US is that there are some, I’ll say perverse incentives that are likely to make prices that much higher in the US.” 

Professor Michael Sinha, a scholar at Northeastern University’s Center for Health Policy and Law agrees.

“Importation is a temporary work-around at best and will only be useful for certain drugs. I can’t see the system working well for brand-name drugs, which are controlled by a single distribution chain that maintains US-based market exclusivity.” 

Of course, it’s no surprise to critics that Canada’s enviable health and drug regulations helped to inspire this policy initiative“The same holds true for certain highpriced medical device products, where patients may travel to Canada to purchase products that are subsequently utilized by healthcare practitioners in the US”, says Amato.  A 2020 election in the US has pushed medical care into the mainstream with politicians like U.S. Senator and presidential contender Bernie Sanders even escorting a group of Americans to Canada to purchase medicine earlier this year. 

For years Americans sought out cheaper medicine by caravanning north to pick up everything from penicillin to insulin. If the Trump administration’s plan does go forward, it could mean fewer seniors at the US-Canada border buying cheap medicine, more money in American’s pockets and ideally fewer deaths in a country where the cost for essential medication has skyrocketed in recent years. Unlike in Canada where the government sets maximum prices for drugs, the U.S. takes a relatively hands-off approach to regulating drug and prices, which means medication can easily outplace inflation.  

Between 2012 and 2016, for example, the price of insulin—a drug diabetics need to regulate their blood sugar—doubled from $2,900 USD to $5,700 USD per year, according to the nonprofit HeathCare Cost InstituteThe effect of this was a significantly higher retail cost for consumers in the US relative to their Canadian counterparts. Whereas in the US, the retail price for a vial of Humalog insulin in the U.S. is $300the same vial costs just $32 in Canada. But you don’t need a report to truly understand how desperate Americans are for medical care. Popular sites like GoFundMe are littered with pleas from people asking for help with everyday medical-related issues Canadians often take for granted, like hospital gloves, syringes and even money for insulin.  

Fortunately, if the proposed policy changes in the US do end up producing a detrimental effect on the Canadian health market, the Canadian government can take action to respond. According to Wyonch“there are legislative tools that the government could activate if a problem were to arise”. For instance, the government can introduce legislation to ban prescription drug exports or to change export rules.  

In the end, in order to create sustainable ongoing change, the U.S. needs to get serious about the politics that govern medical decisions instead of importing solutions, explains Professor Brook K. Baker at Northeastern University’s School of Law. “The real politics answer to this question, in my opinion, is that previous administrations were captured by Big Pharma though lobbying, campaign contributions, and general pro-corporate government policies,” he says. “The stated reason, however, despite the passage of authorizing legislation, was that the Food and Drug Administration could not adequately assure the safety of medicines imported from Canada.” 

Of course, preventing Americans from legally buying Canadian drugs won’t solve the problem. A Manitoba-based online pharmacy, aptly called CanadaDrugs.com, made a name for itself by selling drugs online to international clients, including Americans. Its rock-bottom prices lured in Americans eager to pay less for their medication. Sadly, it was too good to be true. The company was fined $34 million U.S. for selling counterfeit or unapproved drugs to Americans, among many others. This is an example of how the drive to find inexpensive medication in Canada can easily lead to fraud. 

At the end of the day, Baker doesn’t have much faith that Canadian-U.S. legislation will go through. “The U.S. market is the biggest and most lucrative in the world.  In my opinion ‘Big Pharma’ is going to do everything in its power to defeat or undermine this proposal, plus the government of Canada is not wild about it either,” he says. “Even if this plan actualizes far down the road in 2021 or 2022, it cannot possibly meet the needs of U.S. patients and payers for dramatically cheaper drug prices.  In my opinion, it is only the threat of compulsory and government use licenses and enforceable conditions placed on government-funded biopharmaceutical research that has strong prospects for significantly impacting prices in the U.S.”. 

Author: Takara Small