CHPI report finds Canadian supply could deplete quickly under US demand for lower drug costs
Research from the Canadian Health Policy Institute (CHPI) indicates that the United States is unlikely to achieve healthcare cost savings by importing prescription drugs from Canada.
This importation strategy has been supported by US political figures, including former President Donald Trump and Vice-President Kamala Harris.
Under Trump’s administration in 2020, a pathway was created for states to seek FDA approval for drug importation programs.
As of August 28, several states — Colorado, Florida, Maine, New Hampshire, and New Mexico — had submitted importation proposals to the FDA. The Biden administration, with Harris as vice-president, approved Florida’s proposal through the FDA in 2024.
CHPI CEO Brett Skinner, PhD, conducted an analysis of 2023 sales volumes in both Canadian and US markets for 27 drugs included in the Colorado and Florida proposals. The study estimated that US demand would deplete the Canadian supply of these drugs in just 57 days, on average.
Skinner contends that state importation programs face inherent challenges due to significant demand disparities.
“American consumers outnumber Canadian consumers by a ratio of more than 8 to 1. Manufacturers will not over-supply the Canadian market, and the Canadian government will ban exports to prevent shortages,” he explains.
Skinner also notes that even without such preventive measures, importation would fail to yield required savings for FDA program approval.
“State importation programs will not generate the consumer savings required by the FDA for approval of their programs because Canadian distributors will mark-up the price of exported drugs to capture the difference,” he states.
Further analysis in the study reveals that Canada’s federal government caps the list prices of patented drugs for domestic consumers, while wholesale and pharmacy mark-ups are limited to drugs reimbursed by public plans.
However, there are no price regulations for drugs designated for export, which further diminishes the likelihood of US cost savings through Canadian imports.
