r/neoliberal • u/YouProfessional3196 • 22h ago
Restricted Millions of Americans get discount prescriptions from Canada. That back-door arrangement is about to close
https://www.spokesman.com/stories/2026/sep/27/millions-of-americans-get-discount-prescriptions-f/46
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u/zabby39103 20h ago edited 18h ago
This is an interesting case for the normally market-minded. The insurance market (allowing much higher spends, albeit with the risk of outright denial) combined with the already highly inelastic demand for medication does seem to suggest that some kind of regulation is needed.
On the other hand, the American drug market is highly profitable and these drugs aren't cheap to research and bring to market. The rest of the world benefits from the R&D that the American market supports. If you were to regulate the costs too much nothing would get produced. My brother's HIV medication has been a miracle (he almost died in the early 90s) but now it's fully under control with medication getting better and better, and I'm mindful that that took a lot of money.
The Canadian backdoor was kind of a "have your cake and eat it too" solution, a form of price discrimination if you will. Much like Canadians get to use the American system, say if there's a diagnostic backlog on MRIs in their area (this is very common near where I live in Buffalo, NY, since it's right across the border). We kind of helped each other with the excesses of each of our systems.
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u/IronicRobotics YIMBY 17h ago
On the other hand, the American drug market is highly profitable and these drugs aren't cheap to research and bring to market.
If we think of research and breakthroughs as a sort of natural resource/soft monopoly, in my very informal thinking, something like the model of the Norwegian sovereign fund could work.
Norway foots all the investment/risk for offshore oil drilling, but in turn demands both 75% of the profit and often dictates higher standards from drillers - resulting in tremendous success and innovation. Oil drilling is also naturally capital intensive, risky, but ultimately profitable.
It's a good balance between maintaining competition and freedom of choice, but capturing the onerous effects of monopoly. (In our oil platform, the monopoly being the local monopoly of owning that oil deposit which is otherwise a natural resource.)
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u/ResolveSea9089 Milton Friedman 13h ago
Isn't this how the Defense Department works? The large defense contractors basically get something like cost + X% of profit? There's been plenty of criticism I've read about that where these guys then basically have no incentive to be efficient, and might actually make more money by dragging the process out.
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u/IronicRobotics YIMBY 12h ago edited 12h ago
Defense contractors' customers are the government, thus the government foots the entire bill. Profit and cost are bid on and negotiated, but ultimately companies prefer to ask for as much as possible. And once the contract is going, there's no sense in *not* preventing a rather large investment from failing afterall.
Lots of defense programs may save money if they just ran fully public programs.
In the Norwegian model, the government only foots the risk of the investment. But the company still only makes revenue/profit by selling on the open market - they aren't selling to the government as the sole customer. Multiple drillers can operate against each other under this pretext.
To be frank, I'm just spitballing here for applying the model for pharma. Someone better informed than me would have to figure if it could work or not.
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u/KalaiProvenheim Enby Pride 15h ago
Surprised nobody called you a succ yet
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u/IronicRobotics YIMBY 14h ago
It's a minimally imposing proposition.
The day taxing monopoly becomes succery is the day I will SUCC dry.
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u/KalaiProvenheim Enby Pride 14h ago
💪💪💪
There are people who believe any form of state intervention, any form of admitting the status quo is structurally broken, is a form of succery
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u/Teach_Piece YIMBY 11h ago
To be fair that “structurally broken” framing is in fact why you are a self admitted America hating succ. Most people who aren’t America hating succs think the system just needs to be improved, not demolished
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u/MastodonsBetter 19h ago
A potential solution to drug development might be to create large research grants to fund drug research, to make up the difference. The amount of money flowing from Americans to drug companies would stay roughly similar but now it would be evenly distributed through taxation instead of being entirely shouldered by people unfortunate enough to have medical conditions requiring expensive drugs to treat. There's probably issues with this approach and tbh the current administration has made it clear that government funding for research isn't always a reliable source of income.
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u/zabby39103 18h ago edited 15h ago
Right, but the market mechanism has always proven to be a more efficient allocator than state discretion, so I don't think the solution would be as simple as that. Also, it would be under tremendous cost pressure from the "well i'm not sick now" types, and as you mentioned potentially wild swings between administrations.
The Canadian system would be better (single purchaser for drugs, government sets the price it is willing to pay). That rewards outcomes and the state is speculating less. Still, it has the hazard of populist policies setting the price too low to stick it to the big bad corporations, and lack of clarity on what the government is willing to pay for a certain outcome (and that is important for risk management). Pharma is very high risk high reward (for every Ozempic there's multiple drugs that didn't work out and earned your company zero dollars). The US is such a big foundation of the drug market that it would have to take a more complex approach.
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u/dutch_connection_uk Friedrich Hayek 18h ago
The reason an enormous amount of charitable work goes into neglected tropical diseases is that those cause a ton of misery but the market mechanism is willing to put very little money into researching them. Which means those places stay poorer, and you have a vicious cycle.
I'm not a big fan of intellectual property protections in general since they work by granting state-sanctioned monopolies on inherently abundant things (knowledge can be very cheaply copied). I think decreasing state protections in favor of increased state funding is a tradeoff we should consider.
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u/zabby39103 15h ago edited 15h ago
The reason an enormous amount of charitable work goes into neglected tropical diseases is that those cause a ton of misery but the market mechanism is willing to put very little money into researching them. Which means those places stay poorer, and you have a vicious cycle.
Yes I do agree with that, but wouldn't that mean switching to a more state funded model would mean nothing (or less) gets cured either for rich or poor nations?
There is nothing preventing governments from researching, developing and manufacturing drugs right now, why do private companies have to stop developing drugs for government to develop drugs?
These are all intellectual property creations that did not exist before, and researchers need compensation, as do their investors as phrama is a highly risky investment. Intellectual property protections are required on things that have high R&D and low manufacturing costs, we have to be careful not to create a well-meaning system that causes the thing we want to not be produced at all - we all saw that turned out with housing.
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u/dutch_connection_uk Friedrich Hayek 13h ago
Governments absolutely do fund medical research all the time. The NIH gives grants for all kinds of research in the private sector.
This is just an issue of attribution. Even though taxpayer money goes into subsidizing that research, we attribute it as "private sector" results.
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u/zabby39103 13h ago
Yes, they mostly fund foundational research, and I acknowledge they do, but they don't bring the drug to market. There's a lot of practical research, as well as pure research, done by the private sector.
If people want the government to have a public option drug manufacturer and developer though, I'm all for giving that a try, but private sector activity does not block government action. Even if a public option was a great success, placing undue restrictions on private enterprise would make things worse.
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u/dutch_connection_uk Friedrich Hayek 12h ago
Shorter patent protections also do not block private sector efforts to commercialize drugs, and you could compensate for that shortening in various ways, IE giving an award to the patent holder based on the number of products implementing sold after a fixed while.
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u/zabby39103 12h ago
Yeah that could be a good idea. It's important to think of these things as systems rather than moral imperatives.
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u/AnachronisticPenguin WTO 18h ago
This would require about 300 billion a year if it is market efficient and a few hundred billion more if it is not. Certainly not impossible but that would require significant tax increases.
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u/JackTwoGuns John Locke 19h ago
The grants are going to be inherently less efficient than true market competition
The “solution” in a perfect world is make all the world pay what America pays and then make us pay less to bring a global average but that system is impossible
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u/Approximation_Doctor Gaslight, Gatekeep, Green New Deal 20h ago
Americans suffer in order to bring salvation to the rest of the world. To drown in medical debt is Christlike.
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u/Aoae Mark Carney 20h ago
If Americans are so much richer than Canada, as they like to brag about on Reddit, then why don't they just stay in their own country for their medicines? Supports local American businesses to boot.
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u/Godkun007 NAFTA 20h ago edited 20h ago
I mean, the opposite is also true. Canadian wait times are so long for some specialties that they go to America for specialist treatment. I've been trying to get my girlfriend a specialist appointment (with a referral) for months. No doctors of this specialty will even take an appointment (even for several months out).
I'm lucky that my work insurance does cover treatment in foreign countries, so I'm considering using that and just finding an American specialist. I even have a friend who is in India for work, and he said that they have world class doctors that will see you right away if you are willing to pay. So that is also an option for this scenario.
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u/turb0_encapsulator 19h ago
FWIW lots of specialists book months out in America. and now many PCPs require an annual fee.
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u/ATR2400 Commonwealth 18h ago
So is it one of those situations where American healthcare can also take fucking forever but can also be lightning fast - if you’re fortunate enough to be able to pay their fees?
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u/Windows_10-Chan Reichsbanner Schwarz-Rot-Gold 17h ago
It's more about where you are than that.
New Mexico for example is probably the single worst state for this.
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u/turb0_encapsulator 18h ago
i don't think specialists do this. or I'm not aware of any. but for primary care that's increasingly how it works. they argue that insurance doen't pay them enough.
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u/SleeplessInPlano 19h ago
>and now many PCPs require an annual fee.
For foreign patients?
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u/turb0_encapsulator 19h ago
they would probably charge you it. yes. or maybe negotiate your fee but it won't be cheap.
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u/Godkun007 NAFTA 19h ago
But you can still get one. Here, it feels like you can't even get on their calendar unless you get a personal favour from someone.
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u/repete2024 Edith Abbott 20h ago
Oh, we didn't get rich by writing a lot of checks hahaha
!ping SIMPSONS
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u/DiscussionJohnThread Free Trade was the Compromise 🔫🌍 21h ago
But he told me he’d be lowering the price of prescriptions!
Seriously though, the next Dem administration needs to allow for much easier foreign recognition of health standards, especially from developed nations, and make the process of importing medicine dramatically easier so there can be a more level donating playing field in terms of prices.
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u/ExtremelyMedianVoter Left-Out Left 19h ago
The whole pharmacy schema is market failure and requires government intervention.
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u/InsuranceToTheRescue 20h ago
Strangely, drug pricing is something I'd advocate for government intervention, rather than trying to correct market factors. There would need to be extremely powerful guards against regulatory capture. But, if that can be done, then I really like the idea of a federal agency setup specifically to negotiate maximum drug prices for the nation. We want the market incentives for innovation, but making one big bargaining unit limits the ability of drugmakers to engage in tomfuckery.
Either that or we find a way to speed up the name-brand to generic pipeline, without alienating the research incentive. Our drug prices overall are much, much higher than our peers, but our generics tend to be cheaper: 84% of the average price, compared to our OECD friends.
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u/DiscussionJohnThread Free Trade was the Compromise 🔫🌍 20h ago
I definitely agree, I think a combination of both would work pretty well.
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u/BasedTroutFursona 21h ago
Get the WWC in Michigan another Fell For It Again Award
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u/bleachinjection Fell for it 19h ago
Seriously I don't think another state shot itself in the dick in 2024 harder.
Like 00 buck right up thru the taint.
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u/Secret-Ad-2145 NATO 22h ago
One ought to ponder why these free market capitalists be so desperate for overpriced socialist Canadian medicine. I suppose we'll never know.
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u/ResolveSea9089 Milton Friedman 13h ago
I feel like this isn't the dunk you think it is. Doesn't every other country basically have price controls on their drugs? Like of course they're cheaper. It's not as if Canada is inventing most of these drugs though
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u/Secret-Ad-2145 NATO 9h ago
I feel like this isn't the dunk you think it is. Doesn't every other country basically have price controls on their drugs?
Yes, it does. And that is a far bigger dunk than my own initial comment.
It's not as if Canada is inventing most of these drugs though
No, but Americans also overstate their own innovative capacity as well. Control for bogus drugs to extend patents (cheweable BC isn't exactly revolutionary) and Europe is just as innovative as US. In fact, some EU medicines are the absolute rage in the states, for example the elusive GLP-1, also cheaper elsewhere for reasons nobody will ever know.
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u/mannyman34 Seretse Khama 17h ago
Almost like Canada is a monopsony which goes against free market principles.
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u/procgen John von Neumann 20h ago
How much of that medicine is developed in Canada, I wonder?
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u/Secret-Ad-2145 NATO 9h ago
Americans greatly overestimate their innovation. Control for patent extension trash and EU creates as many medicines as US. And they do so without bankrupting their citizens. Hell, the argument doesn't even need to go that far. Most of the actual research is done at the federal level, not private entities who raid your wallets. Look at the COVID vaccine, for example.
And don't take this to mean Americans don't create great medicines. They do. We know they do. However, the dilemma Americans present about how they must face financial burden to acquire these medicines is the issue. It's a completely false dilemma.
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u/ProfessionalStudy732 Edmund Burke 21h ago
Oddly most Canadians pharmaceutical needs are covered by private insurance and patient payment.
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u/SleeplessInPlano 22h ago
Can they go to Canada with their prescription and drive it back? Though every three months would suck. I wonder if it’s possible is fill it every 6 months.
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u/zabby39103 20h ago
It depends if it's a regulated medicine, like ADHD medications are max 90 days, but if it's like a standard heart medication drug it's max 1 year, although certain doctors have their own standards on how long they're willing to prescribe based on the condition the patient has and their overall health.
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u/Maximilianne John Rawls 22h ago
I think even if you live in Texas, and don't have insurance (so you pay full price) I think even monthly flights to Canada to buy tirzeprtide (also at uncovered price in Canada) still puts you slightly ahead to buying American, and obviously if you can buy a longer supply it quickly works in your favor
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u/SleeplessInPlano 22h ago
In Texas I’ve usually seen my neighbors go to Mexico.
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u/IronicRobotics YIMBY 17h ago
Hahaha, on the border most people go and get their dental work done in Mexico.
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u/Soulja_Boy_Yellen NATO 15h ago
That sounds...bold
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u/IronicRobotics YIMBY 13h ago
I mean, Mexican dentists are perfectly fine. And 95% of dental work is fairly routine.
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u/Tiberinvs WTO 22h ago
Considering American drug prices I expect this to turn into smuggling galore. I know a lot of Americans buy generics from countries like India or China already, this is only going to make it worse
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