Controlling the Cost of Drugs: the Canadian Experience

In 1969 Canada began programs at both the national and provincial levels to lower prescription drug prices. These programs may have contributed to a significant decline between 1970 and 1974 of 39 percent in the average price of 16 drugs selected for study. During this time, the average price for the same drugs in the United States declined only 1.4 percent. One major program, a change in the compulsory patent licensing, is described and analyzed. Other Canadian programs, designed to promote competition in the drug industry, and their effects are discussed. Comparison of U.S. and Canadian prescription prices paid by the pharmacist reveals interesting similarities. According to one 1970 study of prices for 20 products in 8 countries, U.S. prices ranked highest for 12 products and second highest for 3 more (Jacoby, 1971). Canadian prices ranked highest for 3 products and second highest for 14. Also, both countries experienced significant increases in personal expenditures for prescription drugs between 196