During the last 16 years, Canadian pharmacies have been experiencing annual increases in the demand for prescription drugs, according to the study published by the Canadian Institute for Health Information (CIHI), Health Care Cost Drivers: The Facts (2011). Between 1998 and 2007 there were four main factors driving demand. The aging population and population growth each accounted for 10 percent, while the development of new drugs accounted for 20 percent growth. The single biggest factor, however, was the increase in the volume of sales, which totaled a significant 60 percent of consumption growth.
This trend has continued, and by 2012 statistics analyzed by CIHI indicated that prescription drugs accounted for 13.4 percent of all healthcare costs in Canada, rising from 6.3% in 1975. One of the most innovative industries in Canada, the pharmaceutical sector is composed of companies developing and manufacturing new drugs and generic medicines, as well as over the counter medications. With a 2.5 percent share of the global market in terms of pharmaceutical sales, Canada is the eighth largest world market. Increasingly, people living in the US have realized the stark difference in medication prices between the States and Canada, where even drugs manufactured by American companies are generally cheaper.
There have also been developments in the field of practice for pharmacists in Canada, resulting in the addition of professional services that were previously reserved to physicians. This means Canadian pharmacists can be consulted about drugs and give advice and opinions on their use, as well as selling and preparing medications. In the US, more than half of the 67,000 pharmacies are located within stores, hospitals, clinics, nursing homes and prisons. An increasing number of Americans are taking advantage of the improved Canadian professional service and the access to cheaper drugs provided by Canadian pharmacies.
The price of medication
Prices for drugs are determined by a number of different factors, including whether or not a country has national universal healthcare and what laws are in place to enable price control by the government. In Canada there is a law that ensures that the Patented Medicines Prices Review Board (PMPRB) has the power to order a price reduction should the price of a drug exceed the midpoint or median of the price ranges charged in six European countries plus the United States. In the US prices are unregulated and therefore exceptionally high, however, unlike the US, the European countries also intervene in a variety of different ways to keep drug costs down and Canada’s low prices thus reflect the effect of the European controls.
It is also the case that drug companies are willing to sell drugs at a lower cost in Canada and elsewhere precisely because they can charge top dollar in the US, thereby recouping their expensive research and development costs; economists call this “price discrimination.” According to Canadian Industry Statistics (CIS), sales revenues from Canadian pharmacies and drug stores have risen by an average compound annual growth rate (CAGR) of 5.9 per cent between 2001, when sales totaled $17.3 billion, and 2010, when sales totaled $28.9 billion, as more and more people have taken advantage of the lower prices.
Between 2010 and 2013, a 2.2 percent CAGR made Canada the seventh fastest growing market in the world (IMS Health Pharmafocus 2017). Branded products make up 76 percent of Canadian sales and 37 percent of prescriptions. The rest are sales of generics. Since 2003 employment in the pharmaceutical sector in Canada has increased by 1.6 percent and in 2013 the manufacturing portion employed 27,000 people.
People who opt to physically cross the border to Canada rather than shop online for their medications need to fulfill the requirements laid down by the Food and Drug Administration (FDA) and US Customs. They need two copies of their doctor’s prescription – one for the Canadian pharmacist and one for US Customs. Prescription drugs should be stored in the original container and declared when clearing Customs. In general, the response of US Customs to personal importation of drugs for individuals is less strict than for big companies who attempt to import in bulk for resale or distribution. A three-month supply of a prescription drug is usually the maximum allowed and, of course, the drug has to be for personal use and not for resale.
Online Canadian pharmacies also regularly ship drugs to customers outside of Canada, primarily to the US. In fact, more than half of Canadian production is exported and the drugs being supplied are sourced from the US (34 percent of imports) and Europe (44 percent of imports). Between 2001 and 2012 pharmaceutical imports and exports between Canada and the rest of the world increased by 93 percent and 136 percent respectively. In 2012 Canada exported medications worth $5.2 billions – more than double the value of domestic exports in 2001 of $2.2 billions (Statistics Canada & US Census Bureau, Global Trade Atlas).
Major benefits of shopping at Canadian pharmacies
Saving money on the cost of drugs is a major factor in the decision to shop at Canadian pharmacies. In 2010 an estimated one million Americans were regularly buying drugs from Canadian pharmacies, according to an article in the Orlando Sentinel (May 2, 2010). The high cost of drugs in the US meant that many people reached the proscribed limit for prescription drugs partway through the year, which was then $2,830, even when covered by Medicare. An article in online resource ElderLawAnswers in 2013 explains that in some cases cross-border bus trips were being organized, just so people could get their prescriptions filled at cheaper Canadian prices.
The costs of brand-name drugs in Canada have consistently been substantially less than they are in the US. Since 1992, the prices of pharmaceuticals have been increasing at a rate that is slower than inflation (Patented Medicine Price Index, Consumer Price Index) and according to the PMPRB, which conducts an international price comparison between seven foreign countries – the United States, France, the United Kingdom, Germany, Switzerland, Sweden, and Italy – drug prices in Canadian pharmacies have been on average lower (PMPRB Annual Report, 2012).
Access to certain medications is the second key factor. Some drugs that require a prescription in the US do not require a prescription in other countries, even Canada, and this makes them much more accessible to Americans. Certain medicines are available in other countries but not in the US, so patients in need, whether due to high US prices or availability of medications, are turning to Canadian pharmacies in their droves for much-needed help.