What can be done about Canada's high drug prices?

Interesting documentary on CBC' s The Fifth Estate, following the vagaries of the Canadian health system, and particularly its prescription drug system.

Most Canadians are justifiably proud of our universal publicly-funded healthcare system, and we often compare ourselves with the nightmare south of the border. But among other similar countries who do have socialized medicine, we don't stack up so well. In fact, Canadians pay some of the highest drug prices in the world, second only to the United States, and those prices are still rising. In particular, we are the only country with universal healthcare which does not also have a publicly-funded drug care system. So, while we are well looked after while in hospital (including all the necessary drugs), as soon as we leave the hospital we are very much on our own, and must cover the cost of drugs ourselves, either through a private drug plan (if we are lucky) or just out of our savings (again, if we are lucky). Many Canadians just can't afford drug treatments they need, and prescriptions often go unfilled (the documentary is replete with poignant examples).

Part of the problem is the cost of the drugs we sell. Many doctors prescribe more expensive, brand-name drugs, rather than the cheaper or generic alternatives. For one thing, doctors are influenced by the marketing ploys of pharmaceutical companies, including visiting sales reps bearing gifts - apparently, that stuff really works.

Another part of the problem is private health insurance companies, which charge their own cut on corporate drug plans. Private insurance costs have increased ten-fold in the last ten years, and there is no impetus for the system as it is to change, as it is the companies themselves who cover the higher costs. Private drug plans in Canada are estimated by the program researchers to be wasting up to $3 billion a year.

One country, though, has drastically changed its system, and this has had a huge impact on drug care costs. New Zealand, a small country with a population just a tenth of Canada's, has a universal healthcare system not dissimilar to Canada's. But they have taken on the might of the pharmaceutical industry, and they have won. In New Zealand, any prescription costs just $5.

Drug companies in New Zealand are forced to compete against each other, and the lowest drug price wins the government contract. These negotiations have resulted in cost reductions of up to 99% in some cases! As a result NZ drug prices are around 10% of Canada's on average. For example, one popular hypertension drug which is actually manufactured in Canada, sells in Canada for $130 a year, while in New Zealand it sells for just $10 a year. A particular cancer drug costs $85,000 a pop in Canada, and yes it costs just $5 in New Zealand.

There is a trade-off, though. The range of treatments available in New Zealand is not as wide as in Canada, but New Zealanders are well aware of this and are apparently happy with the trade-off. The program asks whether we might not be better accepting such a trade-off here too.