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Understanding Variations in International Drug Prices

Publication Date

Rapidly rising prescription drug prices have caused many consumers, third-party payers, and policymakers to look for ways to lower their drug costs. One strategy that many have seen as a potential solution is to import drug products from countries where drug prices are lower than those in the United States — commonly called reimportation. This report focuses on the differences between prices in the United States and Canada, and seeks to create an “apples-to-apples” comparison of the prices consumers might face for a specific market basket of drugs in each country, taking into account any insurance coverage they might have. We make this comparison for fifteen different market baskets of drugs, to test the sensitivity of results to the drugs selected.

Across the different market baskets, Canadian prices were about one-third lower on average than the prices charged to insured Americans. Because those without coverage in the United States do not have access to the discounts negotiated by third-party payers, these individuals would find that typical prices in Canada are about half of those they face in the United States. Overall, differences are larger for brand-name drugs, and much smaller for generic drugs. In fact, prices for generic drugs are likely to be higher in Canada, at least compared to the prices charged to people in the United States with insurance coverage.