But few here expect the Medicare overhaul to provide more than a Band-Aid for seniors who rely on its drug benefit. So Internet pharmacies are making a bid to get a larger share of the estimated $192 billion that Americans spend each year on prescription drugs.
The companies are trying to establish independent accreditation to assure American consumers of the safety of the Canadian pharmacies and helping states and municipalities set up Web sites to help government employees buy imported drugs.
"The only thing that will end the Internet pharmacy industry in Canada is if U.S. pharmacy prices come into line," said David MacKay, executive director of the Canadian International Pharmacy Association, which represents about 25 Internet drugstores. "But how long is it going to take before Congress decides to leverage its purchasing power, put price pressure into place or impose price controls as this country does?
"Right now, it's the pharmaceutical industry leveraging U.S. drug prices."
Most U.S. analysts believe that the Medicare drug benefit in the short run will drive drug prices even higher.
Just keeping up
Tim McBride, a health care expert at Washington University in St. Louis, for one, said the benefit to seniors will quickly be outstripped by drug costs.
"With drug costs already rising between 10 and 15 percent a year, seniors may not see any net savings at all, really," he said.
The average senior spends $2,322 a year for prescription drugs - $999 of that is out of pocket, with the rest covered by retiree health coverage, government programs, charity or private insurance, according to the nonpartisan Kaiser Commission on Medicaid and the Uninsured.
About 5 percent of seniors spend $4,000 a year or more for drugs, the commission says, and 47 percent of those have no health care.
For seniors with heavy drug expenses, Canadian pharmacies are a godsend - they can find drugs there at roughly half of U.S. prices. Reasons for the price gap between the two countries are complicated by many factors - from differences in currency values to the propensity of Americans to file lawsuits in medical matters.
But there is one clear, simple difference: Canada controls drug prices, the United States does not.
The job of Canada's Patented Medicine Prices Review Board is to guarantee that prices charged by pharmaceutical manufacturers for a patented drug are "not excessive" compared with prices of comparable medicines. If the board finds a drug is too expensive, it is empowered to order a company to cut the price.
Average annual increases of patented drug prices in Canada have fallen substantially since the board was started in 1987 and have been far below those in the United States.
Whether to follow the lead of Canada was a major focus of the congressional fight over the Medicare bill. The Republican majority prevailed in the debate, arguing that price regulations would stifle research and development of new drugs.
Drug companies spent 9.9 percent of their Canadian sales on R&D last year, the price review board reported. That's little more than half the 18 percent that companies spent on research in the United States, according to the drug industry's trade group, Pharmaceutical Research and Manufacturers of America, or PhRMA.
Price controls would stifle research efforts that could develop drugs to protect aging baby boomers from Parkinson's, Alzheimer's and other diseases, said John Calfee, health care analyst at the American Enterprise Institute. "The drugs we will need are more important than the ones we already have," Calfee said.
Maryland Health Secretary Nelson J. Sabatini agrees with Calfee. The issue should not be drug price controls for the United States, he said, but rather getting other nations to share research costs: "We're paying for R&D for the rest of the world, and that's not fair."
Maryland has so far not opted to join other states that are considering Canadian import programs. Facing rising drug costs and declining tax revenues, the governors of Minnesota, Illinois, New Hampshire, Iowa, Michigan and Wisconsin, among others, are leading a movement toward establishing such programs.
Supply and demand
Sabatini does not think such programs make sense. "If everybody starts doing that, there aren't going to be enough drugs for the Canadians," he said.
Drug importation is not a new issue in border states. Seniors in Minnesota and North Dakota have been driving to pharmacies in Canada for more than 20 years, said Peter Wyckoff, executive director of the Minnesota Senior Federation. People seeking discounts have swelled the federation's membership by one-third this year - to 29,000.
"Every one of those people is in need of affordable drugs," Wyckoff said. "So we make them honorary Minnesotans."
