As I vaguely recall, the reason the same drugs are available in Canada at a lower price is because somehow the US taxpayers are subsidysing the American drug companies for the drugs they are forced to sell to Canada.
Therefore, by selling Canadian drugs in America, buyers are buying drugs subsidized by the US taxpayer. Sort of sliding into a National Health System for presciptions.
I would be very appreciative to anyone who heard that show, and has a better memory than mine.
In Canada, drug companies are told they can't charge more than X. But the drug companies still sell there because of the marginal profit on each pill.
Suppose you've got ABC Pharmaceuticals, and they spend $50 million to develop a new drug. Each prescription costs $5 in chemicals to make. Suppose that they believe that demand is 50,000 prescriptions per year. To get their $50 million back over 10 years, assuming no time value of money, would require $5 million in revenue per year, or $105 per prescription (since $5 per prescription would go to the actual chemicals). Now they do this, and then in Canada, with an extra 5,000 prescriptions per year, they can sell the drug too. There, the government says they can only charge $30. Well, they go for this reduced rate, because $30 is higher than $5, and they still make $25 on each prescription. Now suppose the US comes in and also imposes a cap of $30. Well, then the drug company throws in the towel. Same thing happens if so many Americans go to Canada that they cannot recoop their investment.
Price caps are horrible. They distort the market, and cause people to stop R&D and production. It's a great deal if the drug has been developed already, and you can mooch of their labors. It's a horrible deal if you have a disease for which the cure hasn't been developed yet!