State government could save about $36.5 million in its state health care plan, about $37.3 million in Medicaid costs and $33.8 million in reduced costs to health plan members, Luallen said. The total projected savings would be about $107.6 million, she said.

"Kentucky is in the throes of yet another budget crisis, yet another health care crisis, and it's time we think outside the box and pursue policies that help our citizens with the burden of health care," Luallen said.

The report comes at a time when the state is grappling to restructure its current health insurance plan for teachers and state employees.

Gov. Ernie Fletcher has said he plans to call the General Assembly into a special session next Tuesday to deal with the state's public employee health benefits package.

In Canada, prescription drugs are on average about 40 percent cheaper than in the United States, Luallen said. Depending on the drug, savings can range from 30 to 80 percent, she said.

Several states have considered getting drugs from Canada, she said. Illinois, Maryland, New Hampshire, Oregon and Vermont have sought waivers from the federal Food and Drug Administration to get Canadian drugs, Luallen said. The FDA has denied the requests.

Senate President David Williams, R-Burkesville, said getting prescription drugs from Canada would not work.

"The total number of Canadians that exist are the same number of people that live in California," Williams said. "So drug companies will not be exporting enough drugs to Canada for us to re-import to significantly affect the cost of medication in this country. That's just a cruel hoax."

Fletcher's chief of staff, Daniel Groves, said the governor would "be happy to take a look at re-importation to see if it would in fact provide substantial savings for people across Kentucky."