Canadians pay much more than Americans for generic drugs because government policies in Canada distort the market for prescription medicines. Canadian government policies insulate generic drug companies and pharmacy retailers from normal market forces that would put downward pressure on prices for generic drugs.
This study compares prices for generic and brand-name drugs in Canada and the United States for the year 2006. Differences between the economics and public policy of the two countries theoretically explain the observed variation in prices for identical drugs. This study estimates the effect on total retail-drug expenditures from price distortions caused by Canadian public policies.
Canadian data
The main Canadian data set used for this study included three lists of drug products.
- The 100 most commonly prescribed brand-name drug products in Canada in 2006, ranked by the number of prescriptions dispensed. This sample represents 69% of the total number of brand-name prescriptions dispensed in the Canadian market in 2006.
- The 100 most commonly prescribed generic drug products in Canada in 2006, ranked by the number of prescriptions dispensed. This sample represents 57% of the total number of generic prescriptions dispensed in the Canadian market in 2006.
- All manufacturers in the Canadian generic market for each of the 100 most commonly prescribed generic drug products in 2006 and their associated market shares defined by the number of prescriptions dispensed for each product in 2006.