Another Capitalist Myth

Another myth about competition lowering costs to consumers bites the dust. Give business a break and they will take it, while still screwing you and me.

And while our prices are cheaper than in the U.S. you and I are in effect subsidizing generic drug manufacturers in Canada.

Oh yes and don't forget that the largest increase in health care costs is drugs.

The benefits of strong competition in Canada's generic drug sector are not finding their way into consumers' pocketbooks, Canada's Competition Bureau said in a report released on Monday.

The report found that one of the reasons generic drugs are more expensive in Canada than other countries is the existence of a rebate system that discourages pharmacies from passing along savings to customers.

In most of Canada's provinces, drug manufacturers compete with each other by offering pharmacies rebates of an average 40 percent off the invoice price as an incentive for the retailers to choose their products, the bureau said.

But the rebates are typically not reflected in the prices that consumers pay for drugs.

"They're giving (pharmacies) a break," Commissioner of Competition Sheridan Scott said in response to reporters' questions at a press conference. "That's a normal thing. The question is, why is the money staying at the pharmacy level."

The study found that the rebate system gives manufacturers little incentive to compete through lower prices.

And these are the same guys who whine about unfair competition from the Big Pharma establishment. They are as much a part of Big Pharma as the established drug companies. Horse of a different colour.

SEE:

Merck Tax Rip Off

Big Pharma Rip Off

The Mulroney Legacy

Profits Up Jobs Cut

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Merck Tax Rip Off

Merck still has a $1.76 billion tax dispute with Canadian authorities, and has filed an appeal with the Canada Revenue Agency that is expected to be reviewed this year, spokesman Raymond Kerins said.

The pharmaceutical giant disclosed both tax cases in November in a routine Securities and Exchange Commission filing. Merck said the Canadian dispute "related to certain intercompany pricing matters."

Tax and accounting analyst Robert Willens of Lehman Brothers said in such cases drugmakers generally sell medicines at low cost to subsidiaries in countries with lower tax rates, which can then mark up the prices and keep more profit after taxes.

Merck is not the only Big Pharma company to get caught out engaging in this tax swindle known as transfer pricing. It's based on off shoring ones corporation or personal taxes in a tax haven thus avoiding paying taxes in the country of operation. Something the Irving's have done for years.

We have been participating in OECD for 20 years now on transfer pricing guidelines for instance. That work is critical to having a set of international rules that work for everybody.

We do try and understand the way that businesses operate and certainly there are many needs a company will have for offshore treasury functions. We start to get a bit upset about these when we find that they aren’t really carrying out real treasury functions, that there aren’t, possibly, real people there or very few people there and very few facilities for them to do this work. That is when we get into arguments as to whether or not it is a genuinely commercial function of the group or whether or not it is some sort of tax mitigation or tax planning.

See:

Big Pharma Rip Off

The Mulroney Legacy

AIDS


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