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More discussions with Al: Why are prescription drugs so expensive here?

07/10/2010 05:12 am ET | Updated May 25, 2011

Al called back ready for more. Without even a hello, he jabbed, "You keep criticizing health care in the U.S., but you don't bother mentioning that we are the world leader in biomedical research and development. In fact, in 2006, three quarters of the world's biotechnology revenues and 82% of world R&D spending in biotechnology was in the U.S."

"Completely true. And we are the home to great research centers like the Mayo Clinic, Johns Hopkins, and the National Institute of Health."

"So our money is paying for research that helps the world. How come the world isn't sending us money to do their research?"

"It's business, they pay for the research products, like pharmaceuticals and medical devices. Of course, they also supply us with their brains. Over a third of the Ph.D.'s in science and engineering in the US are from foreigner-born graduate students and more than half the top science students are the children of immigrants."

"Speaking of pharmaceuticals, what's all this I keep reading about re-importation? Why would anyone drive to Canada to buy drugs? Aren't those drugs dangerous?"

"Al, it's the same exact drugs we use here! In fact, the word "re-importation" is, itself, crazy. We produce the drugs then export them to other countries where we sell them much more cheaply than here in the U.S.. People get in their cars, then drive across the border to buy their prescription drugs and then drive back."

"Why is it so much more expensive to buy drugs in the U.S.? After all shouldn't there be less shipping costs?"

"Al, this is the beauty of unregulated pricing. Pharmaceutical companies love the fact that in the US you can charge whatever the market can bear. In Canada there is a single government-run insurance program with strictly negotiated prices. Of course, it's a business so if they are selling a drug in Canada for $0.35, then they are probably still making money at that price even thought they might charge $0.50 or a dollar here."

"You're exaggerating! There's no way that the price difference is that much."

"Actually it is. Americans pay 50% more for comparable products than they would in UK, Germany, Spain, France and Italy."

"So it's evil for pharma companies to make money! Don't get started on that socialism propaganda again!"

"Of course it isn't evil to make money. But, the way different countries handle pharmaceutical companies varies and we should ask ourselves are we doing it well? Ever see those T.V. ads for drugs?"

"Sure. Every time I see them I wonder if I just came down with a new disease. Erectile dysfunction, got it, severe dandruff, got it, irritable bowel syndrome too. Love calling my doctor afterwards and asking if I am covered for these new drugs to cure my new disease."

"You're the perfect customer. Pharma companies spend billions on direct to consumer advertisement to get people like you to take more drugs. That marketing's got a great ROI. Ever wonder why you don't see it when you travel abroad? Because it's illegal in almost every developed countries!"

"I don't believe in price controls but I'm convinced that if we could get rid of the direct-to-consumer ads we all might be better off. Does it really make a big difference in why we spend so much more than other countries?"

"It's only a small percent. Call me back in a couple of days and I'll tell you more."