Canadians pay much more than Americans for generic drugs because government policies in Canada distort the market for prescription medicines. In currency-equivalent terms, Canadian retail prices for generic prescription drugs in 2006 were on average 115% higher than retail prices observed in the United States for identical drugs. A previous analysis using 2003 data found that prices for generic drugs were 78% higher in Canada. By contrast, Canadian retail prices for brand-name drugs were on average 51% below US prices for identical drugs in 2006. In 2003, the prices for brand-name drugs was 43% lower in Canada on average. For Canadians, this means that since 2003 the cost of generic drugs has risen relative to US prices, while the cost of brand-name drugs has decreased.

This study estimates that in 2006 alone federal-provincial-territorial pre-scription drug policies cost Canadians between $2.5 billion and $6.6 billion in unnecessary spending due to inflated prices for generic drugs and inefficient use of medicines. Over the four years from 2003 to 2006, the total amount of money wasted because of misguided prescription-drug policies in Canada could range from as high as $20 billion to over $26 billion. The findings of this study suggest that Canadians would be much better off if federal and provincial governments repealed policies that distort the market for prescription drugs.