Presently, one of the challenges in society, specifically, California, is providing quality medical care for all residents. Everyone from the President of the United States to the clerk at the grocery store have strong opinions as to how the problem should be solved.
Today, we are in the 8th day of a government shut-down; part of the reason for this shut down has to do with funding Obamacare and ensuring that all companies, congress and individuals are offered the same exemption status. Whether you are on the Democrat or Republican side of the debate, everyone care agree that we, as a nation, have an issue of providing affordable health care to the general population of the US.
Everyone understands that we must make some sort of change to address this serious issue. Why is it that medical care and medicine are so expensive? Why, when I have health insurance, do I have to pay $200 at Walgreens for a cream for my son’s diaper rash that I can get in Mexico for less than $3.00? Why when I am working in Canada, does a doctor’s visit and medication cost $58.00 but the same would cost $100 here in the US? Is the medical care that much better? Are the drugs that much safer?
So, my question is why are prescription drugs, even those manufactured by American companies, cost much less in Canada and Mexico than in the United States?
The answer is Price Controls. Price Control is “Government dictated ceiling on the prices of essential consumer goods, to keep cost of living within a manageable range.” – www.businessdictionary.com
According to www.slate.com, the Canadian government has a review board that orders a price reduction of a drug if the price of that drug exceeds the average price in six European countries plus the United States. And Canada “piggy-backs” on other countries price controls. Many of the European countries already employ price controls in different ways to ensure that the prices of prescription drugs are kept down.
Developing a new drug is a very costly venture and requires tremendous financial investment toward research and development. These pharmaceutical companies recoup their costs for research and development by charging higher prices for the medications in the US than they would in a place like Mexico. This brings in the concept of price discrimination.
Price discrimination is the practice of one retailer, wholesaler, or manufacturer charging different prices for the same items to different customers. – www.wisegeek.com
Drug companies are willing to sell their products to Canada and Mexico for significantly less than they do to the US simply because they can cover their basic production costs for those markets at the same time knowing they will make up for the lack of profit by charging more money in the US to recoup their expenses. So they are selling the same product to Canada, Mexico and the US but the prices for the drugs are different prices in every country.
Recently, Congress has been trying to implement new bills that would stop price discrimination but there is a case of “Why?” is it a good thing too.
By selling drugs at a reduced cost to economically suffering countries, ultimately it will lower the costs of the drugs in the US because the product is moving in the market and the companies are slowly recouping some of their original expense.
So to sum it up, it isn’t that the drugs are safer or of inferior quality, it’s just that the pharmaceutical companies sell to those countries at a reduced price because their economy doesn’t support the higher prices of the drugs. If people do not buy the drug, the product doesn’t move off the shelves and the pharmaceutical companies end up without any possible return on their original investment.
By Robin Follman-Otta