No, it's because our government negotiates on behalf of all Canadians. And we are a very big healthcare market (even with a small population) since we all participate in the health care system – since it's public.
The negotiation goes like this: "Here's what we'll pay you for that. If you don't like it, we'll ignore your patents and intellectual property and manufacture it ourselves."
The companies would rather prevent Canada from funding competition, so they just jack up prices in the US to compensate.
If the US passed a law requiring sales of drugs in the US to match the lowest sale price in any other country, one of 2 things would happen.
The likely thing is that innovation would come to a standstill. Money goes to where it can make the most money. No money in drugs? No new drugs.
Or, the companies would get a lot more hard nosed about sales in countries with price controls, and there would be trade wars between the US and those countries. And then you would see higher prices in Canada.
> If you don't like it, we'll ignore your patents and intellectual property and manufacture it ourselves
Citation?
> so they just jack up prices in the US to compensate.
Pharmaceutical companies charge as much as they can anywhere, including in the US. They wouldn't entertain reducing prices in the US even if the Canadian market were different.
Any time there are price controls, there is scarcity. That is, unless the price controls are subsidized in some way like in the situation we're talking about.
I like the innovative drugs that are being made, so I'm not in favor of price controls.
If you think drugs are too expensive, then do something about it. Create some useful drugs and sell them for a cheaper price.
> Any time there are price controls, there is scarcity
That's not true. It would be the case for (close to) perfectly competitive markets with lower margins, like petrol, basic foodstuffs to some extent etc. It does not apply to markets controlled by oligopolies/monopolies. Especially pharmaceuticals where margins are extremely high and producers of some drugs would still be able to make a profit if they cut (list) prices by a magnitude or two.
Only argument against is that it might decrease available funding for developing new drugs, which might be a legitimate concern. But in no way would reasonable prices controls result in a scarcity of almost all currently available drugs.
" When inventor Frederick Banting discovered insulin in 1923, he refused to put his name on the patent. He felt it was unethical for a doctor to profit from a discovery that would save lives. Banting’s co-inventors, James Collip and Charles Best, sold the insulin patent to the University of Toronto for a mere $1. They wanted everyone who needed their medication to be able to afford it.
"
There is no "IP in Canada for Insulin given UofT "owns" the patent.
Most of the price differences between US and Canada stems from the difference in patents and trademarks. Canada has far more "Generics" vs the US.
Actually, the health system that Canada has did not start until 1947, and the product you are talking about is literally not the product under discussion.
> The likely thing is that innovation would come to a standstill. Money goes to where it can make the most money. No money in drugs? No new drugs.
There are pharmaceutical companies all around the world, while it's true that the US currently has the largest market cap for pharma companies, it's not like the rest of the world is sitting on it's hands. Of the top 15 largest pharmaceutical companies in the world, 8 are in the US, and 7 abroad. But market cap is a poor metric for impact, especially in the US, where it seems the market can price a social media company with no profit at 44billion, I'm not particularly convinced by valuations on pharmaceutical companies who's share pricing rely on price gouging and a indentured customer base to stay high.
Another perspective is that while they're able to sell insulin at 40x cost, something they developed decades ago, what's their incentive to develop new drugs? In countries where companies are required to provide licensing for generics after a certain time period, they would be incentivized to continue developing new drugs in order to keep products on the shelves that are in the exclusive licensing window.
Regardless of any of the above, what you're essentially advocating for is fleecing US citizens to the benefit of the rest of the world. I'm just not sure how this could possibly be a good thing for the US.
Doesn't that go both ways? Eli Lilly is a huge organization negotiating in favor of higher prices, so it makes sense that a huge organization (i.e. the government or insurance companies) would be needed to negotiate against them.
Even if there is a power imbalance between Eli Lilly and the Canadian Government, there would also be a power imbalance if it was instead Eli Lilly vs. individual consumers.
Eli Lilly actually doesn’t negotiate for higher prices. I’ve had somewhat more insight than the average person into how the dynamics of the insulin pricing work, and it’s a total abomination, largely born out of a lack of a universal public insurance option in the US.
Despite the skyrocketing costs of insulin over the decades, Eli Lilly’s profits per unit are mostly in line with inflation. This is because in the US system, there is a pervasive system of rebates that exists between pharmaceutical companies and insurers. Insurers often may only pay 10% of what the sticker price is for insulin. But the way these rebates get negotiated through third party firms known as PBMs create a system that incentivizes insulin that is marked up an incredible amount and then discounted to X, than simply pricing it at X in the first place. But this obviously screws over anyone without access to the rebate, i.e. those without insurance. And this system largely exists because the privatized nature of insurance in the US. If there was some kind of universal medicare in the US, undermines those incentives and the market would normalize immediately.
> If there was some kind of universal medicare in the US
You don't even need that. Just more/better regulation would suffice. You have countries with fully privatized healthcare systems like Switzerland or partially privatized ones like Germany or Netherlands which have no such problems.
> The problem is the regulation that mandates people have insurance or be punished
Which is the cornerstone of any universal healthcare system? It only works in other countries if the healthy subsidize the costs of those less fortunate.
Also Switzerland had compulsory fully private insurance. To be fair they do suffer from similar issues as the US. Healthcare prices are very inflated compared to the surrounding countries, accessibility to some services (e.g. dental) is poor for low income individuals etc.
Of course it helps that Switzerland is a quite homogenous, has low inequality and subsidize access for low income individuals. However inherently the system is not that different from the one in US (I mean Switzerland is closer to US than either is to Britain).
The companies would rather prevent Canada from funding competition, so they just jack up prices in the US to compensate.
If the US passed a law requiring sales of drugs in the US to match the lowest sale price in any other country, one of 2 things would happen.
The likely thing is that innovation would come to a standstill. Money goes to where it can make the most money. No money in drugs? No new drugs.
Or, the companies would get a lot more hard nosed about sales in countries with price controls, and there would be trade wars between the US and those countries. And then you would see higher prices in Canada.