Prescription Drug Prices in
Canada and the United States—Part 3
Retail Price Distribution
Method
At least one legitimate (that is, profit-seeking rather than politically motivated) enterprise provides bus service to Canada for Americans seeking savings on prescription drugs.4 For a fee of US$99, RxPassport Inc. provides trips between the Northgate Mall in Seattle, Washington and the Doctor Solve Health Care Solutions Centre in White Rock, British Columbia: a distance of about 130 miles along Interstate 5 through the Peace Arch border crossing. The bus departs at 9:30 a.m. and returns at 4:30 p.m. As well as filling their prescriptions, passengers take advantage of low Canadian prices to buy other goods in shops near the pharmacy in White Rock (O'Neill 2000; RxPassport Inc. personal communication November 8, 2000).
The existence of this business implies that some people are willing to travel larger distances than assumed reasonable by Sorensen. Therefore, I chose three catchment areas in the United States where a major highway goes to Canada, allowing an American an easy trip North. Furthermore, the adjacent Canadian areas are urban, offering Americans opportunities to shop for goods other than prescription drugs. The areas selected were within Washington and British Columbia, North Dakota--Minnesota and Manitoba, and New York and Ontario.
This study examines prices of three patented drugs that many patients use for a long period: Celebrex® (celecoxib), Lipitor® (atorvastatin), and Paxil® (paroxetine). Previous research indicates that Lipitor® has a smaller Canadian discount (27%), and Paxil® has a larger Canadian discount (42%), than the average volume-weighted Canadian discount of 35% for a sample of the 20 drugs having market exclusivity that are most often prescribed in the United States (Graham and Robson 2000: 13, 20-21). The previous paper did not report on Celebrex®.
Celebrex® is used for patients with osteoarthritis and rheumatoid arthritis. For osteoarthritis, the usual adult dosage of celecoxib is 200mg. For rheumatoid arthritis, the usual adult dosage is 100mg to 200mg twice daily. This study uses a daily dose of 200mg.
Lipitor® is used in various doses to lower blood cholesterol and fats to help prevent heart attacks and strokes. This study uses a dose of 40mg daily.
Paxil® is used to treat depression, panic disorder, obsessive-compulsive disorder, and social phobia. For depression, the recommended initial daily dose is 20mg, the dose used in this study. (Uses and dosages described above are from Medscape 2001).
Using a standard road atlas (Rand McNally 1999), and the criterion that a reasonable cross-border shopping trip for pharmaceutical drugs would be accomplished within daylight hours along a well maintained highway, three areas were defined where Americans might be expected to undertake such a trip.
- Washington to British Columbia refers to the area along the Interstate 5 and British Columbia's Highway 1 from Seattle, WA to West Vancouver, BC. It encompasses Washington's San Juan Islands, which are connected to the mainland by ferry and bridge, but not British Columbia's Gulf Islands. The distance north to south is about 145 miles. The number of pharmacies in the British Columbia area is estimated to be 306 and the number in the Washington area, 397.5
- North Dakota--Minnesota to Manitoba refers to the area from Fargo, ND and Moorhead, MN along the Interstate 29 and the parallel US Highway 75 through Grand Forks, ND, crossing the Canadian border at Emerson, MB, and continuing on Manitoba's Highway 75 to Winnipeg, MB. The distance north to south is about 220 miles. The estimated number of pharmacies in this area is 178 in Manitoba and 73 in North Dakota and Minnesota.
- New York to Ontario refers to the area from Rochester, NY through Buffalo, NY on Interstate 90 or New York's Highway 104, crossing the Canadian border at Niagara Falls, ON or Fort Erie, ON and along Ontario's Queen Elizabeth Way through St. Catherine's ON to Hamilton, ON. The distance east to west is about 150 miles. The estimated number of pharmacies in this area is 165 in Ontario and, in New York, 492.
A random number generator was used to select 50 pharmacies from each of the six areas. Between March 5 and March 16, 2001, each of the 300 pharmacies was canvassed by telephone for the price of a 30-day supply of each of the three drugs. The interviewer also asked for the dispensing fee and about the availability and price of delivery for a prescription.
Canadian prices were converted to American dollars at a rate of CDN$1.48 per US$1.00, the estimated rate at which an American individual would buy US$300 worth of Canadian dollars at a retail foreign-exchange bureau at the time.6
info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580
You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.