"The Canadian medicine supply is not sufficient to support both Canadian and U.S. consumers," the letter states. "The supply simply does not, and will not, exist within Canada to meet such demands."
[1]https://www.cbc.ca/news/canada/toronto/american-demand-canad...
Theoretically drug companies can close off the entire market or increase supply. They’re prohibited from raising prices in the market. Since marginal cost is so low, I expect that they’ll keep selling st increased volumes.
It’s a bit odd that the US is taking this tack instead of just regulating drug prices domestically. But there’s a lot of odd things in the health system.
Perhaps the hope is that US prices will fall, shortages in Canada might cause prices to go up a bit there, but in the end the open market will equalize with lower prices overall.
The current administration is very anti-regulation, so this would be a bad move. Also, allowing Canadian drugs to enter the country will force current producers to lower pricers, which will organically (capitalism) reduce the price through competition.
https://www.healthaffairs.org/doi/full/10.1377/hlthaff.20.3....
What the administration is proposing is effectively to regulate drug prices, but outsource that work to Canada, since it's politically unpalatable to their base here in the US.
They should do the same for Europe.
Also, if I were Canada, I would ban the export of drugs to the United States if the US domestic price for the drug is higher than the Canadian price for the same drug. Because otherwise the effect would be that a single market would exist for the drug, and the average price in Canada would face upward pressure as a result. Although if they did this, an American administration bent on getting the same effect could cap all domestic drug prices to the prices paid by Canadians and skip the pointless importing step. I wonder how Canada would react to that? I guess if I were Canada at that point I would make drug price negotiations secret.
The net result of this drug policy is lower drug prices for US public, under the banner of "stop subsidizing the free-riders". The net result of the tariffs is higher wages for industrial workers, under the banner of "fighting the unfair China".
Both are left-wing outcomes, dressed up as not just acceptable but enticing for the conservative public.
Were there more efficient ways? Yes, we could reign in the pharma and force the 1% to raise wages for the 99%, but that would not be accepted by the conservative Americans, while this approach seems to be accepted.
The net result of tariffs is some combination of: higher costs on the goods purchased by Americans, lower wages paid to the workers making those good, and reduced demand on foreign goods (which may not have a substitute, which may depress the economy). The latter, reduced demand on foreign goods, may in turn hurt foreign economies, reducing their demand on our exports.
Somewhere in that is "higher wages for industrial workers", but it's unlikely tariffs lead to that outcome except in a handful of cases where the US has production capacity available for a substitute good. US steel might be one of said exceptions, because we have large amounts of unused capacity and a comparable or better product, but aren't able to manufacture it as cheaply. It's highly unlikely tariffs on ... checks notes from [1] Alaska pollack (interesting!), child safety seats, and hydrometers are comparable. I don't expect we have huge amounts of latent labor supply just waiting to make these things or manufacturing facilities configured to do so, but I could be wrong.
The net effect of a massive tax cut that disproportionately impacts the wealthy and tariffs that disproportionately affect (nay, target) consumption goods is a regressive tax hike on the majority of Americans.
These aren't left-wing outcomes, they're just bad policies.
[1] - https://ustr.gov/sites/default/files/enforcement/301Investig...
Another issue is that even _generic_ drugs are often wildly overpriced in the US. Canada (or some other country, such as e.g. India, which has a strong pharma industry) could pretty easily just make more of them and exert downward price pressure.
What's unfolding before us here is historic. Previous administrations were all too beholden to Big Pharma to even contemplate any of this.
Sure, Canada could make a positive spin for this, but it's possible it puts their pricing negotiation with big Pharma at risk.
All in all, a cowardly "solution" that will likely result in all sorts of unintended consequences.
Its just another goofy legal loophole to avoid adressing the issue.
It's not a legal loophole. It ensures that the price of the drugs in the US will never be more than the price of the drugs in Canada (plus any additional costs of importing).
Almost nobody will actually import the drugs from Canada, but the legality of it provides sufficient market pressure on pharmaceutical companies that they wouldn't be able to charge 100x the amount in the US that they would in Canada.
Then why wouldnt you just make that the law without the silly roundabout shipping ruse?
Its using trade law to circumvent patent law.
If you read TFA, that's what they're talking about doing.
> Its using trade law to circumvent patent law.
Not at all; the restriction on drug reimports has nothing to do with patents.
https://en.wikipedia.org/wiki/Omega_S.A._v._Costco_Wholesale....
No, this is a common misconception. If FooCorp manufactures a drug in the US and exports it to the US, there is no inherent patent issue with a US entity purchasing it from the Canadian middleman.
I dont know why you italicized patent, in that example it's a trade issue precisely because the patent doesnt cross boarders.
Canada's ability to "negotiate" prices stems from the fact that the US is the single largest market for drugs, accounting for the bulk of revenues that pharmaceutical companies make worldwide.
If drug companies couldn't sell to the US at the high prices they currently do, they wouldn't be able to manage the relatively low prices that they offer to Canada and other countries.
Maybe the US should allow governments to negotiate drug prices.
I don't know what "pride" has anything to do with it. The US does subsidize the rest of the world, implicitly, which is why any effort to reduce drug prices in the US will result in other countries paying more, in the long run.
> Maybe the US should allow governments to negotiate drug prices.
I don't know what you mean by "allow governments to negotiate drug prices". The US doesn't have any say in whether other countries negotiate prices domestically.
State and the Federal governments. The USG isn't the only governmental body in the USA.
All are essentially blocked from negotiations by Federal law/policy.
https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...
Why should the government "negotiate" prices that it's not paying? The prices are negotiated by the insurers who actually pay them, and they have far greater incentive than the government to keep them down.
This system appears to work in the vast majority of OECD countries, where drug prices are not actually set by a central authority (contrary to popular misconception).
No, Medicare doesn't negotiate drug prices because Medicare isn't a payer for pharmaceutical coverage. Those prices are negotiated by the private insurers who provide the benefits.
In almost all of the systems, medication is not covered unless you're a child, extremely poor, or very old.
In practice about 30% of all healthcare expenditure in Canada comes from private sources, since things like medication, dental care, vision care, and a whole myriad of other critical segments of healthcare are not covered by any government health plan.
Ensuring access to those who need it is the primary concern. If Americans were suffering an unintended shortage, that'd be one thing... But causing an artificial shortage for Canadians in order to profit off Americans would result in near immediate regulation.
That is, of course, how an actual free market works. Healthcare is far from a free market, so instead of embracing the opportunity for growth of the Canadian economy, we get responses like the one above.