Table of Contents
I. Why Are Canadian Medications Often Less Expensive?
i. The Patented Medicine Prices Review Board (PMPRB)
ii. New Medications and Patent Protections
II. Why Are Medications Often More Expensive in the United States?
ii. Direct-to-Consumer Advertising
iii. Higher Drug Spending in the U.S.
III. FAQ: How can I reduce prescription costs by using a Canadian pharmacy?
Prescription medication prices can vary significantly between countries. Some patients are surprised to find that the same medication may cost less in Canada than in the United States. Several factors contribute to these differences, including how drug prices are reviewed and patent protections.
This article explains the main reasons Canadian medication prices are lower, how U.S. pricing works, and what drives the cost difference between the two countries.
Why Are Canadian Medications Often Less Expensive?
The difference between Canadian and American medication prices is especially noticeable for brand-name medications. There are several reasons why Canada’s drug pricing system provides lower prices.
The Patented Medicine Prices Review Board (PMPRB)
One factor that can influence medication pricing in Canada is the Patented Medicine Prices Review Board (PMPRB). The PMPRB is a federal body that reviews the prices of patented medications sold in Canada. Its role is to determine whether the prices manufacturers charge appear excessive. [1]
When a patented medication is first sold in Canada, manufacturers must report pricing and sales information to the PMPRB. The agency reviews the medication’s price and may compare it to prices in other countries or to similar medications. If the price appears too high, the review process can continue and may lead to actions that lower the price. [1]
Because patented drug prices are monitored in this way, the list prices of some medications in Canada can end up lower than in the United States.
For patients comparing online Canadian pharmacies, it is also important to make sure the pharmacy itself is legitimate and safe. Our article How Do I Know If My Canadian Pharmacy Is Legitimate? explains what credentials and warning signs to look for.
New Medications and Patent Protections
New medications are often among the most expensive drugs in the United States. This is partly because patents prevent other manufacturers from producing generic versions for a number of years. The limited alternatives during this period can keep prices high.
In Canada, newly introduced patented drugs remain subject to review by the Patented Medicine Prices Review Board (PMPRB). As part of this process, the price of a patented medication may be compared with international benchmarks and other factors to determine whether the price appears excessive. This review can influence how high a new medication is priced when it first enters the Canadian market. [1]
Over time, prices in both countries may decline as generic versions become available after patent protection expires. In Canada, the prices of many generic medications are also influenced by negotiations between provincial and territorial governments and drug manufacturers. These negotiations help establish pricing levels for many commonly used generic drugs across public drug plans. [2]
If you want to learn more about how generics compare with brand-name medications, our guide What is the difference between brand-name and generic medications? explains how the process works and why they are usually less expensive.
Medication Prices
Medication prices can change over time. However, in Canada, price increases for patented medicines are monitored through the same review framework and may be compared against inflation measures such as the Consumer Price Index. [1]
Secondly, in addition to Canadian sources, some online pharmacies may also work with regulated pharmacies in other countries when permitted. This can sometimes provide additional pricing options depending on the medication being ordered.
Why Are Medications Often More Expensive in the United States?
Several features of the U.S. healthcare system influence how prescription drugs are priced and how much patients pay out of pocket.
The American System
Prescription drug prices in the U.S. are influenced by several groups within the healthcare system. These include pharmaceutical companies, pharmacy benefit managers (PBMs), and health insurance companies that determine how medications are priced and what patients ultimately pay.
- Pharmaceutical companies manufacture and sell medications. In many cases, companies do not publicly explain how those prices are determined or why the costs may be higher than the expenses associated with developing the medication.
- Pharmacy benefit managers work on behalf of health insurers and employers to negotiate discounts and rebates with drug manufacturers. These agreements can influence which medications insurance plans favor, but the details of these negotiations are generally not publicly disclosed. As a result, it may not always be clear whether the negotiated savings are passed on to patients.
- Health insurance companies also influence prescription drug prices by determining coverage rules and setting copayments. Working with PBMs, insurers decide how medications are covered under health plans and how much patients must pay for their prescriptions. [3]
Because these negotiations and pricing decisions often happen behind closed doors, the overall process can be difficult for patients and physicians to fully understand.
Direct-to-Consumer Advertising
Direct-to-consumer advertising refers to the promotion of prescription medications directly to patients through channels such as television, print media, and online advertising rather than only through healthcare professionals. Among high-income countries, the United States and New Zealand are the only countries that allow this type of advertising for prescription drugs. [4]
These advertisements can increase public awareness of specific medications and encourage patients to ask their doctors about them. As a result, advertising can influence demand for certain prescription drugs. [5]
Critics of direct-to-consumer advertising argue that it may contribute to higher healthcare spending by encouraging greater use of prescription medications, particularly newer, more expensive, brand-name drugs. When patients request these medications from their physicians, prescribing patterns may shift toward newer and often more expensive treatments. [5]
Higher Drug Spending in the U.S.
Prescription drug spending in the United States is higher than in many comparable countries. In 2019, the United States spent more than $1,100 per person on prescription medicines, while comparable high-income countries spent about $552 per person on average. [6]
Both insurance payments and out-of-pocket costs in the U.S. are higher than in comparable countries. Even though insurance programs cover a similar share of prescription drug costs in the United States as they do in other countries, the higher overall prices still lead to greater spending for patients and insurers. [6]
International comparisons also show that many brand-name medications are priced higher in the United States than in other high-income countries. For example, prices for some drugs used to treat conditions such as diabetes, cardiovascular disease, and inflammatory conditions are significantly higher in the U.S. than in countries like Germany, the United Kingdom, and Switzerland. [6]
For Americans exploring alternative medication sources, our Canadian Pharmacy: The Complete Guide for Americans explains how ordering from a Canadian pharmacy works, what regulations apply, and how patients can verify that a pharmacy is legitimate.
FAQ: How can I reduce prescription costs by using a Canadian pharmacy?
Patients can lower prescription costs when using an online Canadian pharmacy by comparing prices, choosing generic medications when available, ordering larger prescription quantities, and using legitimate pharmacies that follow recognized safety standards. Because medication pricing systems differ between Canada and the United States, many American patients explore Canadian pharmacies as a way to reduce out-of-pocket prescription costs.
If you are considering ordering medication online from a Canadian pharmacy, the following steps may help maximize potential savings.
1. Compare prices across multiple pharmacies
Medication prices can vary between pharmacies, even for the same prescription. Before placing an order, it can help to compare prices across a few legitimate pharmacies to see where the medication is offered at the lowest price. At the same time, patients should be cautious of websites advertising prices that seem unusually low compared with other pharmacies.
2. Ask your doctor about generic alternatives
Generic medications contain the same active ingredient as brand-name drugs and are required to meet the same safety and effectiveness standards. Because generics are typically introduced after patents expire, they are often significantly less expensive than brand-name medications.
3. Order a larger supply when appropriate
Many online Canadian pharmacies dispense orders in personal-use quantities, often up to a 90-day supply. Ordering a larger supply when appropriate may reduce the price per unit and decrease the number of shipments needed during the year.
4. Plan prescription refills in advance
Ordering medications before a refill is urgently needed can help avoid expedited shipping or emergency purchases from higher-cost pharmacies. Planning ahead allows patients to compare pricing and choose the most affordable option.
The content in this article is intended for informational purposes only. This website does not provide medical advice. In all circumstances, you should always seek the advice of your physician and/or other qualified health professionals(s) for drug, medical condition, or treatment advice. The content provided on this website is not a substitute for professional medical advice, diagnosis or treatment.