Prescription Drugs:

Companies Typically Charge More in the United States Than in Canada

HRD-92-110: Published: Sep 30, 1992. Publicly Released: Oct 23, 1992.

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Pursuant to a congressional request, GAO provided information on the cost of prescription drug products, focusing on: (1) domestic and foreign price comparisons of identical prescription drugs; and (2) causes for documented price differentials.

GAO found that: (1) manufacturers' prices for identical prescription drugs are generally higher in the United States than in Canada; (2) differences in U.S. and Canadian drug prices can be attributed to Canadian price regulations, reimbursement practices, and price controls; (3) manufacturers' research, development, marketing, production, and distribution costs are the same for identical drugs, but manufacturers charge U.S. wholesalers substantially more for the same drugs; (4) 81 percent of the drugs reviewed were more expensive in the United States and prices averaged 32 percent more; (5) Canadian regulations force manufacturers to accept cost reviews for new drugs and restrain prices for existing drugs; (6) Canadian provincial governments' containment of manufacturers' price setting discretion, liberal reimbursement policy, and power over adding or removing drugs from the reimbursable list results in concentrated buying power and low prices; and (7) there is some dispute over whether similar U.S. regulation and price controls would effectively control drug prices while sufficiently encouraging research and development of new and innovative drug products.

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