State mail order importation schemes demonstrate the impact of product liability laws on American prescription drug prices.

Most, if not all, cross-border drug sellers in Canada require American citizens to waive their right to the protection of American product liability laws. Differences in product liability laws between Canada and the United States is the largest single factor contributing to price differences between Canada and the United States.

Recently a number of states including Minnesota, New Hampshire and Wisconsin have developed Web sites to encourage Americans to import prescription drugs from foreign sources. Most, if not all, cross-border drug sellers in Canada require American citizens to waive their right to the protection of American product liability laws. Differences in product liability laws between Canada and the United States is the largest single factor contributing to price differences between Canada and the United States. The following excerpt is from a waiver required by a prominent Internet drug seller who is a recommended supplier to these state-endorsed websites. “I hereby release (Internet drug supplier) and its employees and contractors… harmless from any and all acts, liabilities, damages (etc.) of any kind or nature… from any side effects… their manner of prescribing generic drugs and non-child-protective packaging. This agreement along with any disputes that may arise will be governed and construed in accordance with the laws of Canada.”

Price differences between the United States and other countries are attributable to a variety of factors such as differences in health systems, price controls, and economies. However the largest impact on price differences between Canada and the United States may be found in differences in product liability laws. A comprehensive study on the impact of product liability laws on price differences between Canada and the United States revealed that nearly half of the difference on the average price of 119 drugs is attributable to product liability risk.> American law-makers who are serious about taking steps to lower drug prices and overall health costs, may find that bringing American product liability laws more closely in line with those in Canada and Europe may be the most effective mechanism for lowering healthcare costs for American patients.