Document Type

Article

Disciplines

International Law

Abstract

Drug spending is rising faster than any other component of health care in the United States. Between 1992 and 2002, the growth rate for pharmaceuticals was 7.2% per annum compared to 3.3% for total health spending (1). By 2002, Americans were paying in excess of $162 billion for retail prescription drugs (2). Rising drug prices have accounted for by far the largest proportion of that growth in recent years (2). Prices for patented single source medications in the United States are significantly higher than in any other developed country, no matter who is doing the calculations (3,4). Even taking into account manufacturers' discounts, U.S. prices are still markedly higher than prices in nearly all other industrialized nations (5).

This article will begin by looking at the consequences of these high prices for the portions of the population that are least able to tolerate them. Although the United States has chosen not to control prices, its northern neighbor, Canada, has taken the opposite approach. Since 1987, Canada has been regulating prices at the federal level and even before 1987 was regulating at the provincial level. These controls have successfully kept prices in Canada much lower than in the United States without leading to any adverse outcomes for the health of Canadians or the economic viability of the pharmaceutical industry. Finally, the article will conclude with an examination of what kinds of savings could be expected in the United States from price controls and what consequences, if any, are likely to occur.

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