DiPalma, Tanzi look to Canada for lower prescription drug costs

Maybe Canada can help

As millions of Americans struggle to afford necessary prescriptions, Sen. Louis DiPalma and Rep. Teresa Tanzi have introduced two bills that would lower prescription costs for Rhode Islanders by looking to Canada.

“Prescription drug costs are ridiculous,” said Senator DiPalma (D-Dist. 12, Middletown, Newport, Tiverton, Little Compton). “Why, in the greatest country on earth, are we paying so much more for life-saving medications than people in other countries?”

According to a 2021 report by the Rand Corporation, prescription drugs in the United States cost 218% what they cost in Canada, a phenomenon driven by higher prices for brand-name drugs.

“Someone living in Rhode Island pays more than double for the exact same prescription as someone living just 300 miles away,” said Representative Tanzi (D-Dist. 34, South Kingstown, Narragansett). “The pharmaceutical companies still make money by selling the drugs in Canada, they’re just making way more money off the backs of Rhode Islanders.”

According to a 2019 report from the Kaiser Family Foundation, 29% of Americans have not taken their medications as prescribed because of cost. And because prescriptions make up around 12% of total health care spending according to the US Government Accountability Office, high costs lead to bigger premiums for private insurance and more Medicare and Medicaid spending.

The legislation introduced by Senator DiPalma and Representative Tanzi intends to change this. One bill (2023-S 0098, 2023-H 5431) would in effect cap prescription costs at the level paid in Canada. The bill would instruct the director of the state employee health insurance plan to create each year an index of the 250 most costly prescription drugs. Prices for these 250 drugs would be capped at the cost paid by four Canadian provinces: Quebec, Ontario, Alberta and British Columbia.

A second bill (2023-S 0099, 2023-H 5430) would create a wholesale drug importation program to directly import lower-cost drugs from Canada to be sold throughout Rhode Island. The drugs must be approved by the US Food and Drug Administration and must be cheaper in Canada to be eligible.

Debate about the cost of prescriptions has raged in recent years, with many in the pharmaceutical industry arguing high costs are necessary to encourage innovation. But critics say the costs have little to do with research expenses. 

As one example, Revlimid, a medication used to treat cancer, was approved by the FDA in 2005 and originally cost $215 per pill. The company has raised the costs more than 20 times since, and one pill is now $878. 

In 2020, the U.S. House Committee on Oversight launched an investigation to understand these price increases and found that the increased costs were not due to research and development or modifications to the drug. Instead, they found, prices were raised in the pursuit of greater profit.

Advocates also point out US taxpayers are paying twice for drugs: once to help develop them and then again to buy them at exorbitant cost. A 2019 report from the Institute for New Economic Thinking analyzed all 356 new drugs approved by the Food and Drug Administration between 2010 and 2019 and found that every one was made possible by research breakthroughs funded by the National Institute of Health (NIH), a federal agency. 

Many other drugs are developed in collaboration with universities which receive significant state and federal funding. Yet drug companies own patents on these drugs that give them a monopoly on their sale. 

For example, Tofacitinib (Xeljanz), which is used to treat arthritis, was developed by the NIH in the 1990s. But the patent is owned by Pfizer, who made $2.5 billion in revenue off the drug in 2021.

“The data clearly shows how Rhode Islanders are being taken advantage of,” said Senator DiPalma. “U.S. taxpayers pay for the research that leads to the development of many of these drugs. Then we pay more than double for each prescription. All so a few companies can make record profits.”

“I think regular people are tired of excuses,” said Representative Tanzi. “These drugs are cheaper in Canada and the companies still make money there. So charge Rhode Islanders the same price you charge Canadians, or we’ll import the same drugs from Canada and save everyone money.”