If the price of the drug is set to recover the cost of capital, and the Canadian’s choose to arbitrarily reduce the price and make the drug less than the price necessary to meet the cost of capital you will not be in the business to produce drugs. It’s pretty simple really.
As an American I’m angry I am subsidizing the drug costs of Canadians. Clearly their price caps are requiring drug sales in the US to be at a higher price so the firms can recover their investment. You want the price of the drugs to go down, you force the Canadians to purchase the drugs at the price necessary for the firms to recover their investment.
Right. You will not be in the business to produce drugs for Canada. Right now the only reason companies are willing to do so (I imagine) is as a sort of loss leader. This situation can exist because Canada's population is small relative to the U.S. In the worst/extreme case, if the price controls became effectively applied to the whole U.S., I imagine drug companies would not sit idly by. They would, by one legal means or another, label their drugs "not for sale in Canada".
Thus destroying Canada's price controls.
So I don't see the problem.
As an American I’m angry I am subsidizing the drug costs of Canadians.
Then let's stop letting them leech off us. Start laundering through their idiotic system, and break it.
You want the price of the drugs to go down, you force the Canadians to purchase the drugs at the price necessary for the firms to recover their investment.
Exactly! Bingo!
Only way to do that is to eliminate their protected system, by taking advantage of it till it breaks.