Many of the prescriptions that residents of the Untied States purchase are cheaper in Canada. A 30-day supply of Diovan or Lipitor can be found in the United States for about $80, but in Canada it can be found for around $45

This astounding price difference begs many people to ask the question, “Why are prescription drugs cheaper in Canada?”

The simple answer is that there are three main factors are work. The first involves government regulation, the second comes from drug formularies, the third deals with drug research and the last comes from lawsuits and other claims.

1. Government Involvement

As much as 5 percent of a prescription drug’s price is influenced by the regulations that the Canadian government places around how much pharmaceutical companies can charge for their drugs. This limit that the government officials place on the price of pharmaceuticals limits how much pharmacies have to pay to buy their drugs from their manufacturers.

This cap that is put in place by the Patented Medicine Prices Review Board in Canada extends into the wholesale price of drugs.

2. Pharmacies

Drug formularies are the next major component in regulating the price of prescription drugs. Because they are involved with supplying drugs to their customers, they can negotiate with pharmaceutical manufacturers as to how much certain medications cost.

Usually, formularies try to persuade drug companies to lower the price of medicines that seniors commonly use. This is especially true of newer medications. Pharmacies tend to do this because seniors are the single largest group of prescription-purchasing people in Canada.

Drug manufacturers have to listen to these pharmacies or they risk their products not being sold.

3. Drug Research

Another reason as to why prescriptions are cheaper in Canada involves the fact that pharmaceuticals are costly to create. Manufacturing them is a relatively cheap process, but the research that goes into creating drugs is very costly.

This, when added to the fact that the United States is responsible for over a third of the world’s research into prescription drugs, helps to explain why the price of drugs is so high in the United States.

4. Legal Claims

The high cost of prescription drugs is to help American pharmaceutical companies to be able to protect themselves against lawsuits.

Each year, thousands of lawsuits are filed against drug makers for side effects of drugs that should be safe. This creates the need for legal representation, costly trials and other research to be done.

Once all of that is said and done, a pharmaceutical company may need to further pay out claims after losing a class suit.

Comparing the Price of Prescription Drugs

If you’re in a situation where you want to see if you can save money on prescription drugs, then the best course of action is to use ePharmacies.com. It is a free, easy-to-use search engine to help consumers compare the cost of drugs from different Canadian pharmacies that have been licensed as safe places to buy from.