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Do Drug Makers Lose Money on Canadian Imports?

Journal article published in 1 by Alan Sager, Deborah Socolar
This paper was not found in any repository; the policy of its publisher is unknown or unclear.
This paper was not found in any repository; the policy of its publisher is unknown or unclear.

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Disclaimer: As always, we write only for ourselves, not on behalf of Boston University or any of its components. Summary Drug makers and others persistently assert that importing prescription drugs from Canada would damage drug makers' profits and their capacity to finance research. This view is widely accepted. Importing proponents have not generally questioned this view but instead focus attention on the clinical and financial benefits of lower drug prices. But what if importing drugs from Canada does not harm drug makers' profits? This data brief questions and explores the premise that importing necessarily means lower profits. Lower Canadian prices let some Americans fill prescriptions that otherwise go unfilled. We find that if new prescriptions' share of imports is 44.53 percent or more, importing actually increases drug makers' profits. This is the point at which the profit lost by drug makers when patients fill existing prescriptions at lower Canadian prices is exactly offset by the profit drug makers gain by selling new prescriptions through Canada. That share is not yet known empirically, but should be ascertained. New prescriptions' share of imports may be high enough today to prevent a loss of profits owing to importation. This finding offers reason to hope that a combination of lower drug prices and higher volumes could address patients' and payers' needs for affordable prescription drugs while satisfying drug makers' needs for adequate profits and research financing.