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Microeconomics Case Study

Case Title:

Drug Price Distortions: US and Canada

Publication Year : 2003

Authors: Deepak Vashist & G Srikanth

Industry: Health Care

Region:North America

Case Code: MBM0001

Teaching Note: Not Available

Structured Assignment: Not Available

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In recent times, the high prices of branded prescription drugs in the US have been contrary to its commitments towards the welfare of its citizens, especially the elderly. This can be attributed to a misplaced patent regulatory mechanism, which on one hand limits the entry of cheaper generics and on the other, inflates costs as a result of a delayed drug approval process. This has led to a thriving illegal importation of prescription drugs from overseas, especially Canada. In such a scenario, the US faces an unenviable task of not only restricting the inflow of these drugs into the US markets but also giving impetus to the consumer access to cheaper drugs within the US.

Pedagogical Objectives:

  • To understand the reasons for drug price distortions between US and Canada and how US can curb the growing importation of prescription drugs from other countries.

Keywords : US pharmaceutical industry and Canadian health care industry, Drug price distortions, Prescription drugs, Internet pharmacy, Re-importation, United States Food and Drug Administration, USFDA, Public health maintenance schemes, Private insurance schemes, Intellectual property protection, Patents, Hatach-Waxman Act, Generic drugs, International Trade & World Economy Case Study, Medicare, Health maintenance organisation

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