Britain Spends 1.1% of GDP on Pharmaceuticals, America 2.0%

The Economist February 15th, 2020 pp27-28 The Americas. Canadian health care. “Justin Trudeau’s drug problem”. “Voters want free medications. How to pay for them?

What can we learn from Canadian Healthcare regarding pharmaceutical prices? As often heard, prices fall when crossing from America to Canada. As an example, insulin is 1/10 as pricey in Canada. More interesting, for Americans, is that Canada spends about 1.8% of GDP for pharmaceuticals behind Germany 1.6%, France 1.5%, Australia 1.4%, Mexico 1.2% and Britain 1.1% versus Japan and America at 2.0%. The point being prices are much lower elsewhere as a % of GDP with Britain being the prime example of buying power-they are the sole negotiator for a single system.

As an aside, Canada does have universal health care but that does not include pharmaceuticals which are purchased for 60% of the population through more than 100,000 employer-accessed private plans! Trudeau made campaign promises to infuse some federal government relief but the provinces worry that costs will be passed to them directly and to citizens in the form of taxes.

Take home. America, Medicare specifically, needs to negotiate pharmaceutical prices much like Britain.