And they're 40% cheaper because the Canadian national government dictates to the pharmaceutical manufacturers what that maximum price shall be.

If Canadian pharmacists have to decide between Yanks and pacifists who will get the meds, guess who the winners will be.

So, IOW, it wasn't about US Pharmaceutical companies gouging the old folks. It was the Canadian government subsidizing the cost of pharmaceuticals to its citizenry, and then some clever pharmacists seeing a way to exploit the situation for personal gain. Alles klar.

I can't see how this is against WTO rules. Those rules govern products that are sold in other countries. This is an act of not selling.

You can't not sell them.

It's not just Canada.

I pointed in in private correspondence to an editor of our local paper that we pay high drug prices -- we subsidize the world -- because if we don't they'll bust the patents and good-bye advances, and my view was "unique."

oj - Sure you can. It's a matter of compliance with patent license agreements. The patent owner has licensed sales in the U.S. to one distributor and sales in Canada to another. Allowing them to violate their license agreements creates competition and ruins the value of the patent. If the government enforces contracts, it has to stop these contract violations.

Bart: it's not the Canadian government subsidizing the cost of pharmaceuticals to its citizenry, it's the Canadian government forcing American pharmaceutical companies to subsidize its citizenry.

Sigh Damned if we sell you drugs, damned if we don't. Thankless job, being Canadian.

pj:

I believe the treaty actually forbids you from not selling products to other countries that might want them.

We knew this day had to come. All the mayors and governors who thought they were going to win their next election based on importing cheap(er) drugs from Canada will have to find another violin to play.

But, on the bright side, at least Americans who bought Vioxx from Canada will now be able to try to sue Merck directly, instead of having to attempt to chase down the US Postal Service, UPS, FedEx, DHL, their Internet Service Provider, a faceless Canadian mail-order house, or Paul Martin.

jim:

It's perfect for Democrats--they can take a case to the WTO and make it a "fair trade" issue as well as big pharma.

If the Canadian government were forcing the pharmaceutical companies to subsidize Canadian citizens, there would be no pharmaceutical companies doing business in Canada. Nobody is going to sell anything at below the 'break-even' price, that is simple economics.

I believe the way it works is that Canada demands discounted drugs as the price of keeping the drug patents. Thus: no cheap drugs for Canada, no patent protection in Canada.

Like with any mass-manufactured product, the makers can afford to sell some units at a discount, as long as they're selling others at full price. But the full-price buyers are still subsidizing the discount buyers.

Papaya,

Wouldn't that pretty much shred NAFTA and every other trade treaty they have if they are willing to dispense with patent protection?

Canada is a single-payer health plan, so pretty much the only buyer of pharmaceuticals is the government. The government sits down with the pharma companies and negotiates a price. More or less, Canada and other single-payer countries aim at paying something more than the cost of producing the drug, which is trivial because it ignores R&D, which is the big cost for pharmas. If the choice is between selling in Canada at a bit over production cost, and not selling in Canada, the pharmas will strike a deal because at least they gain a little bit. The US and other less regulated markets pay significantly more. Obviously, if the pharmas were only receiving production cost from all customers, they wouldn't have money left over for R&D.

However, if Americans start buying their drugs from Canada, the pharmaceutical companies are in trouble. They will lose all their American revenue, which basically pays for R&D and profit. It is the pharmas who insist, contractually, on barring resale into the states. Selling in Canada isn't worth it if it eats into their US sales.

The WTO's position on pharma sales is set out here. In effect, they will allow for compulsory patent licensing under certain circumstances. However, WTO's general (wrongheaded) approach is that exporting is the benefit and importing is the cost. That is, that all countries are eager to export, because their citizens make more profit, but are reluctant to import because their citizens make less profit. Therefore, a reluctance to export is not usually a WTO matter.

Mr. Cohen;

Even if that's the wrong reason, it is the right view. Being forced to sell property is, in fact, expropriation even if "just compensation" is recieved.

OJ is being consistent in his casual disregard for property rights, vis his stance on Kelo and your description of him as a "Republic Socialist".

But importing is as beneficial as exporting.

Mr. Cohen;

Have you joined OJ in believing that people need to be forced to do things beneficial for themselves? Moreover, every export is an import so having rules purely on the export side is sufficient.

Depends on the thing, I suppose. For example, deinstitutionalization, on the grounds that the mentally ill have the right to wander around our cities filthy and psychotic, was bad. Better to make vagrancy a crime, arrest them, commit them and force them through detox and onto their medication.

As for the other, pretending that only exporting is good gives the anti-traders seemingly forceful arguments against importing. Importing Japanese cars has been a much better deal for us than for the Japanese.