Prescription Drug Prices in Canada and the United States, Part 3: Retail Price Distribution

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This study looks at retail prices of three patented prescription drugs in three American and three Canadian areas along the border between Canada and the United States. Although finding that Canadian prices are significantly lower than American prices, it also finds significant differences in prices within each of these areas, as well as between areas in the same country. Given these domestic price differences, a shopper can save almost as much money by bargain hunting within his own area as by crossing the border.

The study finds that differences among services offered by individual pharmacies explain some of the price differences. It also indicates that income differentials among regions within one country may also explain price differences.

In an attempt to understand the consequences of subsidies to pharmaceutical consumption on prices for those who pay out of pocket, the paper looks at current government benefits to patients who use prescription drugs. It finds that Canadian patients do not necessarily have easier access to prescription drugs, and that the effect of these programs on market prices is unclear.

This research shows that there is no such thing as one Canadian or one American price for prescription drugs. Because of this, policy-makers who seek to equalize Canadian and American pharmaceutical prices face an impossible task.

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