The Price of Crossing the Border for Medications

From the New England Journal of Medicine

By Michael Fralick, MD; Jerry Avorn, MD; Aaron S. Kesselheim, MD, JD, MPH

SUMMARY: This NEJM Perspective examines drug importation from Canada as a potential mechanism for increasing competition and reducing the cost of essential medications in the United States. Fralick, Avorn, and Kesselheim review the state of drug importation policy, including a recently proposed bill addressing the safety of Canadian drugs, and assess both the promise and limitations of importation as a pricing solution. The piece situates importation within the broader structure of US drug pricing, arguing that the fundamental driver of high prices — market exclusivity and the absence of negotiation — requires more comprehensive solutions, but that importation could provide meaningful near-term relief, particularly for generic drugs where domestic competition is lacking.

BACKGROUND: US drug prices significantly exceed those in Canada and other countries for many of the same medications. Importation from Canada or elsewhere has been proposed as a mechanism to introduce price competition.

KEY FINDINGS: Importation from Canada or elsewhere may help address the cost of essential medicines, particularly generic drugs, by allowing competition where it is currently absent. A recently proposed bill addressed the safety standards applicable to Canadian-sourced drugs.

IMPLICATIONS: Drug importation could provide near-term relief from high medication costs, particularly for generics, but more fundamental structural reforms are required to address the underlying drivers of US drug pricing.