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Drugmaker moves to bar imports
By KRIS HUNDLEY, Times Staff Writer
Drugmaker GlaxoSmithKline Plc is getting tough in its effort to stop U.S. residents from buying its products at a lower price through Canada. In a letter sent Jan. 3 to Canadian pharmacies and drug wholesalers, Glaxo gave an ultimatum: Quit exporting drugs to the United States or we'll cut you off completely. The letter, signed by Steven Popp, director of customer operations and distribution strategy for Glaxo Canada, said Canadian wholesalers and distributors have until Monday to promise in writing that they will no longer supply pharmacies that ship product to customers in the United States. Effective Tuesday Glaxo said it will "refuse to supply our products to these wholesalers or distributors until such time that we are satisfied that they are complying with our terms and conditions of sale." Among Glaxo's most popular drugs are the antidepressants Paxil and Wellbutrin, as well as AIDs drugs AZT and 3TC. Glaxo, a British company with $29.5-billion in sales in 2001, is the first drugmaker to try to block the booming Canadian drug trade. But if it succeeds in its threats, it may not be the last. As prescription drugs prices in the United States have risen at double-digit rates, more Americans, particularly retirees, have looked north for a solution. In Canada, prescription drugs are less expensive because the government caps prices. And while shipping drugs to the United States is illegal, the U.S. Food and Drug Administration and Customs Service have not interfered with small shipments for personal use. While the individual shipments may be small, the numbers are growing fast. Paul Clark, president and chief executive of Hometown Meds in Carman, Manitoba, said an estimated 1-million shipments of prescription drugs were mailed from Canada to U.S. consumers in 2002. His own 10-year-old pharmacy business has grown tenfold since he started targeting the U.S. market six months ago. "I think we'll do a minimum of $10-million (Canadian) in sales this year," said Clark, a pharmacist. "In fiscal 2002, we did $1.2-million. And all that growth is from the U.S." Clark said he was stunned to get Glaxo's letter, which he describes as "a little remarkable." "Typically, the pharmaceutical companies didn't support our efforts, but there was an understanding that a certain group of people in the U.S. can't afford these medicines and the Canadian supply chain is safe and highly respected," Clark said. "It was not an adversarial relationship with the drugmakers." With Glaxo's letter, that has changed. The drugmaker cited a number of reasons for clamping down on its Canadian distributors: shipping drugs to the United States could be a breach of U.S. food and drug law; exports could undercut an adequate product supply in Canada; the quality of the drugs could be impaired during shipping; and such exports violate Canadian intellectual property laws. The letter did not say how much margin Glaxo loses when a drug like Paxil is sold to a customer in the United States via Hometown Med. The Canadian pharmacy, which has customers fax or mail their doctor's prescription, sells 90 tablets of Paxil (10 mg) for $142.88. The price for the same quantity at Walgreens in St. Petersburg is $263.29. A Glaxo spokeswoman did not return a call Wednesday afternoon seeking comment on the letter. Clark said he and his fellow pharmacists are taking Glaxo's threat seriously but they're not about to stop exporting to the United States. "All the issues they raise in their letter -- about safety and shipping and patent infringement -- are complete nonsense," he said. "They just don't want to come out and say the obvious." Clark said regardless of what action Glaxo takes, he'll still find a source for its drugs, which make up about 10 percent of his sales. Glaxo's best-selling products through Hometown Meds are its AIDS drugs, Clark said. The AIDS drug AZT sells for $98.89 for 100 tablets in Canada and for $171.87 in the United States. "What are the social consequences of telling people they can't get those drugs at a discount?" Clark asked. "We will still source the product because they don't control every wholesaler. But I'm worried about what this trend means. The fear is that other drugmakers might do the same." Canadian pharmacies are organizing to fight Glaxo's threat, and Clark said his group in Manitoba has the support of the provincial government. Exporting drugs is a $400-million business in the central Canadian province, he said, and considered a major employer. "When you consider the impact to Glaxo from all the export business in Manitoba is about $40-million and Glaxo is a $30-billion company, you wonder what they're really worried about," Clark asked. What they're worried about, Clark believes, are people like Marilyn and Thomas White, retirees who live in Seminole. About six months ago, Marilyn, 78, started buying the couple's prescription drugs from Canada and saving big. Tamoxifen, which Marilyn White takes as followup treatment for breast cancer, costs $73.94 for 200 tablets mailed from Hometown Meds. At her drug store down the street, she used to pay $93.89 for 60 tabs. Her Lumigan eyedrops, to prevent glaucoma, cost $104.97 for three bottles from Canada. In Seminole, White was paying $91.09 for one bottle. Hernia medicine for Thomas White, a retired letter carrier, is $186.69 for 90 tables from Canada; the U.S. price was $100 for 30. Marilyn White gets angry when she hears that Glaxo is threatening to shut off supply of its products to Canada. "If they can't give it to us at a good price, why do they resent the fact we can get it elsewhere?" she asked. Getting a discount on prescriptions, she added, "has made all the difference in my retirement." -- Kris Hundley can be reached at hundley@sptimes.com or (727)892-2996.
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From the Times Business report
From the AP
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