Are Canadians free-riding on America's drug innovation?

By Alex Singleton | 2 March 2005

It is commonly charged that Canadians are getting drugs at below the real cost. In order to ensure that new drugs are developed, Americans should be restricted from engaging in free trade by buying Canadian drugs.

It's a complete myth. So says Donald Light, a Professor of Comparative Health Care Systems at the University of Medicine & Dentistry of New Jersey. Professor Light argues (PDF) that Canada pays its way in terms of R&D; expendure. He says there is "no evidence that other research-oriented countries are not paying their R&D; costs every year just out of domestic sales at their lower prices."

In other words, the American public is being right royally ripped-off by high prices. That's why the drug industry has the highest profit margins of any US industry. Free trade in pharmaceuticals would be good for US consumers. It would improve health outcomes. And it would do so without harming innovation.