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Global drug shuffle may backfire

Beyond safety and legal issues, subversion may drive up imported-drug prices without addressing costs at home.

Published October 7, 2004

Lou Angelo, a 69-year-old retired auto mechanic in Brooksville, doesn't consider himself a political activist. But as one of millions of Americans who buy prescriptions from Canada, saving about $100 a month on blood pressure medicine and beta blockers, he is part of a groundswell of pressure for lower drug prices here in the United States.

This week, Wisconsin and Illinois raised the political ante by saying they have created an easy and safe way for their residents to tap into inexpensive drug imports from Ireland and the United Kingdom, as well as Canada.

The initiative puts the Democratic governors of those two states squarely at odds with the Bush administration, which considers such importation risky and illegal.

Lest there be any doubt about this schism, the two governors publicly invited their colleagues in other states to jump on the importation bandwagon.

"Every day, as we wait for Washington to help solve the problem, more and more senior citizens and working families are forced to either disregard their doctors' orders or give up other necessities in order to pay for their medications," Illinois Gov. Rod Blagojevich wrote to his fellow governors.

"We can't keep waiting."

The immediate impact on Floridians is negligible. Dr. John Agwunobi, Florida's health director, said his office would evaluate the Illinois-Wisconsin initiative but typically defers to the Federal Drug Administration on anything Washington considers illegal.

Though Floridians can access Canadian pharmacies directly, either by Internet or phone, they can't participate in the Illinois and Wisconsin program. Officials there have blocked their Web site and toll-free number to nonresidents to avoid swamping the program, said Abby Ottenhoff, Blagojevich's aide.

CanaRx, the Canadian clearinghouse handling the new program, processes orders through a network of 45 pharmacies, about two-thirds of them in Europe. Other states can join gradually as their governors sign on, Ottenhoff said.

On a national scale, the Illinois-Wisconsin program heats up a miniature rebellion by several states that are abetting cross-border purchases. At the same time, legislators from both parties are pushing pro-import legislation, which has passed the House easily but is stalled in the Senate. Majority Leader Bill Frist has not scheduled it for a vote.

With Congress taking its time, this week's go-it-alone announcement by two Democratic governors provides ammunition for their presidential challenger, Sen. John Kerry, who is trying to brand President Bush as an ally of the pharmaceutical industry.

"We think that it's sad that states had to resort to bucking the federal government in order to ensure affordable prescription drugs for their citizens," said Matt Miller, Kerry's Florida spokesman. "The states deserve a partner in this fight, not an adversary."

Bush's top priority is consumer safety, said deputy policy director Megan Hauck, and he is awaiting an internal administration report, due this December, that will discuss how the FDA might certify foreign sources as safe.

"But he really thinks the answer is not importing price controls from other countries, but in getting drug costs down here," said Hauck, citing this year's Medicare reform bill as an example of how to do that.

Uwe Reienhardt, professor of economics and public policy at Princeton University, said the drug importation movement, though popular, "is really a politically cosmetic thing."

An April study by the Congressional Budget Office indicated that wholesale importation would not lower America's drug bill as much as supporters suggest. Middlemen would take their cut, manufacturers probably would retaliate by raising prices for all countries and authorities in Canada and Europe might clamp down on exports to protect their current sweet deals, the study says.

The drug importation movement "is saying, "We don't like to regulate drug prices and therefore want to get Canadian drug prices,"' Reinhardt said. "It's really a way of outsourcing government regulation."

Canada has long offered inexpensive brand-name drugs because its national health service negotiates deep discounts from manufacturers. (Generic drugs are generally cheaper in the United States than in Canada.)

U.S. law prohibits importing drugs from sources that have not been inspected by the FDA, and the FDA says it lacks the money to add a multitude of new sources to its inspection program. Technically, the Illinois-Wisconsin program just helps citizens import their own drugs, but it "would violate the law by causing the importation of drugs that are themselves illegal," associate FDA commissioner William K. Hubbard said Monday.

"We haven't gone so far as to come to court yet," he said. "It may come to that."

So far, government efforts to crack down have been erratic. In June, Florida issued cease-and-desist orders to about a dozen storefronts that help people buy drugs from Canada, but those orders have yet to be enforced and the businesses continue to operate.

On the federal level, the biggest seizure of Canadian imports took place in July, when U.S. Customs officials stopped a shipment of nearly 440 orders from a Canadian pharmacy operating in the Bahamas.

Meanwhile, the cross-border stream of medicine continues. Last year, Americans spent about $1-billion on drugs from Canada, said David MacKay, executive director of the Canadian Internet Pharmacy Association. Sales are up 20 percent so far this year, he said, despite the introduction of Medicare discount drug cards in the United States.

"I think a lot of our growth is due to the Medicare cards," MacKay said. "People said, "Why go through all this red tape when I can just go to Canada?"'

From a base of bargain-hunting, risk-taking individuals, the importation movement has grown to include municipalities and several states, including Minnesota, Wisconsin, North Dakota and New Hampshire, which have set up Web sites that refer their residents to Canadian pharmacies.

The Illinois-Wisconsin program, which promises savings of 25 to 50 percent, takes state-sanctioned law-bending several steps further. It offers both Internet and toll-free phone access to the Canadian clearinghouse that processes orders. It works only with pharmacies that have been inspected and approved by Illinois regulatory agencies, easing safety concerns. And it includes pharmacies in Ireland and the United Kingdom.

Geographical expansion is critical since major drugmakers, particularly Pfizer, are limiting supplies to Canada to reduce reimportation to the United States. Those restrictions have caused shortages, said MacKay, of the Canadian pharmacy group.

"We've had to offer our American patients drugs from foreign pharmacies, from Great Britain for the most part."

Drugmakers would find it more difficult to restrict supplies to European countries because prescription drugs are routinely, and legally, moved around the European Union. Manufacturers sell more cheaply to southern Europe countries, but those drugs often flow to higher-priced nations like Great Britain, where they are relabeled and packaged with English inserts.

All this international shuffling is exactly the problem, warned Wanda Moebius, spokeswoman for the Pharmaceutical Research and Manufacturers of America. Quality control, shipping and relabeling all create safety pitfalls.

To meet growing U.S. demand, Canadian pharmacies sometimes import drugs from Bulgaria, Singapore, Pakistan and other foreign countries, then reship them to the United States, Moebius said.

"We have serious safety concerns with the idea of widening (the importation universe) to include Ireland and the UK. Any drug can be transshipped through Canada and be called Canadian. Now any drugs transshipped through Ireland and the UK are likely to be called Irish or British."

Consumers might not even know their drugs are bad, she said.

"People picture an immediate physical reaction, as opposed to a drug that might be subpotent or superpotent. You may not see a physical reaction, you just may not lower your cholesterol."

The FDA's Hubbard concurred. "These states assert they're importing drugs from licensed pharmacies and that they're the same drugs you can get in the U.S., but we know that's not true," Hubbard said.

But Bob Hayes, president of the Medicare Rights Center, a New York consumer group, said he has never heard of anyone who has been harmed by drugs imported from Canada.

"At this point, the battle is no longer over patient safety," he said. "It's totally about the political muscle of the pharmaceutical industry. It's a tragedy that both the White House and too many Republican governors are choosing the drug companies' interests over the public interest."

Hayes said that while his group supports the efforts of Wisconsin and Illinois, he wonders if they aren't sidestepping a larger issue:

"Why aren't we asking the question of why we can't bring down drug prices in the U.S. to the level Canadians and Europeans pay?" he said. "There's a degree of absurdity here."

[Last modified October 7, 2004, 00:30:24]

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