Several prescription medications are cheaper in other countries than in the United States. The variations in costs may be considerable. Many Americans as well as citizens from some other countries like Canada question why drugs manufactured by companies in the U.S. are less expensive overseas. The reason is that some overseas countries have established national medical structures which put a range of government price controls into practice.
The reason why prescription medications are less expensive overseas is more complex and there are many issues that add to the lesser prices. Some overseas countries have placed an upper limit on the amount that drug manufacturers may charge pharmacies and other suppliers of drugs. This decreases the wholesale prices of drugs by a certain percentage for several pharmacies all over the country. The expensive prescription medications have encouraged extensive efforts to import medications from other countries such as Mexico and Canada, where their price controls create prices around 20 to 30% below the prices in the United States.
Another significant issue, however, can be the variation in the living standards in overseas countries and the U.S. For instance, living standards in Mexico are between 20% and 30% below the normal living standards in the United States. This factor has an impact on the costs which drug companies put on a certain type of medication. In the United States, for example, a can of beer may be cheaper in remote areas than it is in urban areas. This is the reason various drugs are less expensive in Mexico, several Mexicans are not able to pay as much as U.S. citizens and the medication companies offer lower prices for these medications.
Some medication manufacturers have carried out discriminatory pricing. Some propose that drug companies are providing affordable costs overseas since the U.S. has not implemented price controls. In accordance with Feldstein, if the United States establishes price controls, prices may be reduced to some extent and raised in some countries like Mexico. Some consider that the United States consumers subsidize lesser medication prices somewhere else.
Some overseas pharmaceutical businesses have established lesser liability costs than businesses in the United States. In the United States, most people consider that the liability insurance costs for the medication business should be equal to the drugs tax. Some of the provinces in other overseas countries like Canada have drug guidelines and policies which place limitations on the use of new and costly drugs. These districts offer large quantities of drugs to senior consumers of drugs. Hence they have the privilege to bargain directly with the medication companies to reduce prices for medications to match the formulary. This formulary in some parts includes below 40% of new medications.
The United States government should implement price controls on drugs so that it can reduce the prices of prescription medications and reduce the issue of Americans importing drugs from overseas countries. The effective reform in prescription medications policy is to permit the importation of drugs completely, though the pharmaceutical companies can suffer from importation it will support the users.