Substantial differences in health costs between the United States and Canada and other developed countries reflect similar differences in liability costs.

The cost of liability contributes significantly to the disparity in healthcare spending between the United States and other developed countries. One study suggests that by adopting reasonable limits on awards for non-economic damages, healthcare costs in America could be reduced by an estimated $70 to $126 billion. Another study examined the price differences between a wide range of prescription drugs in Canada and the United States and found that increased liability risk in the United States may account for nearly half of the difference in the average price of these drugs.

The difference in healthcare costs between the United States, Canada and other developed countries attracts considerable political and media attention. Yet little attention is given to the impact that the excesses of American medical liability claims have on the price of health services and supplies in the United States. The fact that state endorsed Web sites that encourage importing drugs for personal use from Canada require Americans to waive their right to protection under American liability laws reflects an acknowledgement of the impact of tort costs on drug prices. Any serious effort to lower prescription drug and other healthcare costs in the United States must address the substantial disparity that exists between the costs of medical liability in the United States and other developed countries.