Question

Sample questions for Econ 3308-W 2020

1. Canadians pay too much for generic drugs. Comment.

Answer 1

Canada is still paying far more than other industrialized countries for generic drugs, despite recent efforts by the provinces and territories to cuts costs by bulk-buying six particularly costly medications, a new study has found.

Several services falling outside the insured services definition have received particular attention. One reform, frequently referred to as pharmacare, would improve coverage for necessary pharmaceuticals delivered outside hospitals. Policy analysts note that Canada is the only country with universal health care coverage that does not include medically necessary outpatient pharmaceuticals. This policy problem can in turn be broken down into several distinct but related issues.

One issue is pricing: some pharmaceuticals are extremely expensive, and they are becoming more so. This raises issues related to what is worth buying and at what cost. Because drugs involve intellectual property, they can be patented, which means that no one can compete with that product until the patent expires in Canada, this is 20 years. When it does, competitors can produce generic versions of the product and sell them for less, should they judge that the market is sufficient to allow them to make a profit at that price.

In 2020, Canada announces regulations to cut price of prescription drugs.
Move hailed as ‘crucial step to lower prescription drug costs’.
New rules were resisted by pharmaceutical companies.