TCS Daily

Rolling the Rx Highway

By Duane D. Freese - July 24, 2003 12:00 AM

It's hard to use things that don't exist, no matter how much you're willing to pay for them.

That's one thought to keep in mind in observing the new hands-across-the-border rage in American and Canadian relations -- cross-border trips to buy prescription medicines or advanced health care services.


Almost everyone has heard about Americans, many lacking prescription drug coverage, boarding buses to Windsor, Niagara Falls, Quebec City, New Brunswick and Vancouver to Canada, all to do what is every American's God given right -- hunt for bargains.


And oh, are there bargains to be had. Lipitor, the anti-cholesterol drug, which can cost up to $250 in the United States, can be got in Canada for as little as $134. Ninety tablets of the breast cancer treatment drug Tamoxifen, that can cost $127 in the U.S., can sell for as little as $18 in Canada. While not all bargains are of that magnitude, in general prescription drug prices run substantially less North of the border, than in the lower 48, or in Alaska or Hawaii, for that matter. But only if you can get them.


And that's why the border crossings are on a two way street. For not only do Americans go north, but Canadians are regularly heading south -- not for lower prices but to take advantage of medical care they can't get up there.


Thursday, a Canadian consumer organization -- Consumer Advocare Network (CAN) --Advocare, put 14 Canadians aboard a bus.  Why?  So they could get health care services in Bangor, Maine, that Canada's single payer system -- with its emphasis on price controls -- makes unavailable in a timely manner there.


Tony Lordon of Saint John, New Brunswick is a 17-year family physician. According to him, his patients on the bus are but a small sample of literally thousands of Canadians who annually come to America. They can afford the money to buy better services more than the delays Canada imposes in getting them. As he says, "health care delayed amounts to health care denied" -- especially to ill patients who may die while waiting for the right drug or advanced treatment.


One example of that is a 57-year-old male with hyperlipidemia (high cholesterol) and a family history of early death from heart attacks. He has tried the approved drugs in Canada, but suffered bad side effects; the drug Niaspan might not produce those effects, but he can't get it in Canada. Welcome to Bangor.


Another is a 65-year-old woman with Type 2 Diabetes. She shifted from a private health plan to her provincial health care plan for retirees. She used Avandia for years under the private plan because didn't produce the side effects of weight gain and hypoglycemia she suffered from another drug. But Avandia isn't on the province's approved list, so she'd have to take the one with the side effects -- or come to the United States to buy Avandia.


Similarly, a 44 year-old female with anxiety disorder and panic attack needs time-released Paxil. It's not approved in Canada, so she's boarded the bus, too.


Other patients are coming not for drugs but other treatments Canada's cost controls often lead to delays.


A 45-year old woman, for example, is going blind from what appears to be a fungal eye infection. But it will take her eight to nine months to get a referral to an ophthalmologist in Canada, because price controls have induced a shortage of physicians, particularly specialists. Her appointment in Maine came in a couple weeks. A 76-year-old heart disease patient suffers disabling angina that external counter pulsation could relieve. His condition, though, isn't critical, so the government will keep him disabled rather than give him the treatment he'll now get in the U.S.


Dr. Lordon noted that Canada's health care administration is ready to step in when a patient is dying or critically ill, but asks: "why should you have to wait until you are dying?"


"We have triage here (in Canada) to decide which cases are most in need of care," echoed Durhane Wong-Rieger, chairperson of CAN. "The problem is the people at the end of the line who have to wait six to eight months for care urgently need it now, not when they are desperately ill."


The good news for all these Canadians -- and for the Americans crossing the border into Canada -- is that the pills, physicians and treatments are available. But as Wong-Rieger points out, they are available only because the health care system in America has a more generally free market that promotes innovation.


Yet, some U.S. politicians and so-called consumer advocates in this country dismiss that innovation, all in the name of getting their constituents a price break on drugs or medical care. There have been efforts in Congress, for example, to promote the re-importation of drugs sold by American pharmaceutical companies to Canada back to pharmacies and patients in the United States as a way to control costs. But this move would undermine incentives here for innovation and basically import the Canadian price controls to the United States.


The proponents claim it will save American consumers 35 percent on their drug costs. Considering that pharmaceutical company profits amount to less than 20 cents on a dollar of sales, that suggests that the pharmaceutical companies and investors in them will be satisfied with loses of 15 percent. Not likely.


The whole effort is built on a flimsy understanding of economics. The reason that Canada has lower prices has a lot to do with differences between the two nations. Canadians, for example, in addition to price controls on drugs also cap the liabilities of drug companies, something the main proponents on reimportation refuse to do. The reimportation proponents also ignore the fact that Canada has lower living standards, which means they often substitute more labor intensive treatments for higher tech ones. So, will Americans accept more time in hospital rather than at home with drugs, and will that save any money?


Most of all, though, as Wong-Rieger points out, the move ignores the reality that Canadians amount to 2 to 3 percent of the prescription drug market; Americans, 65 percent. "We get a free ride on the research and development of the American market," she noted.


The Canadians are much like wait-listed passengers at airline ticket desks -- few in number and profitable to sell discounted tickets to in order to fill the plane, but only as long as a sufficient number of other passengers pay full fares.


Turn it around in the case of wait-listing passengers and what you get are airlines going out of business; in the case of drugs, fewer new and innovative therapies.


Indeed, that's exactly what Europe today is facing. On July 10, European Union health ministers met in Rome to discuss reforms that would allow drug companies to offer their drugs at any price they want. The reason: under a regime of price fixing by governments over the last decade. New innovative U.S. drugs have outpaced Europeans by more than two to one. Employment in the U.S. pharmaceutical industry has neared 200,000 while that in Europe has dropped below 100,000.


"Europe has really lost out in this area over the last 10-15 years because it was so much focused on cost and prices," Thomas Cueni, general secretary of Interpharma, a Swiss-based trade association, has noted. Switzerland does not control prices and is home to three of the world's largest biotechnology companies. "By and large growth is driven by innovation and pharmaceuticals are an extremely important part of that."


American politicians may think they're doing their constituents a huge favor through reimportation; the bottom line, though, will be that their constituents will have fewer new and innovative drugs to buy. Only unlike the Canadians who have come down here, they'll have no place to go to get them. I guess that's one way to stop the bus trips.


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