OK, so if a uniform price rule would backfire, what about just allowing U.S. Citizens to buy their drugs from, say, Canadian pharmacies? In fact, the FDA has blessed a kind of pilot program in Florida to do just that! Might this work to lower prices for Americans?
If a relatively small number of Americans were doing this, as is already happening, it’s unlikely to rock the boat too much. But as soon as it started happening at any relevant scale, something similar to Reference Pricing would happen.
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In the Reference Pricing-like scenario, drug companies raise their Canadian prices, then Canada would refuse to pay, the drugs would come off the market, and Canadian patients would do without.
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Say drug companies didn’t or couldn’t raise their Canadian prices. There are about ten times as many people in the US as in Canada. If Americans began buying drugs at scale in Canada, there would be shortages, because drug companies aren’t going to suddenly start supplying Canada with enough drugs to treat twice its population. It’s unlikely Canada would be particularly happy when its citizens can’t get their prescription drugs, and they’d likely forbid the practice.