Israel grabs a share of U.S. drug market

Sometimes offering prescription medication cheaper than Canada, Israeli companies say sales support the Jewish state.

Published December 23, 2004

Lenore Ward of Palm Harbor has been ordering prescription drugs through Canada for the past few years and has been pleased with the savings.

But several months ago, with the prospect of saving even more, she tried a different offshore drug source. After seeing an ad for MagenDavidMeds.com in a Jewish newspaper, the 72-year-old library volunteer tried ordering generic Zyrtec through the Israeli prescription broker.

"I figured I'd take a chance," Ward said of the fast-acting imported antihistamine that was 70 percent cheaper than brand-name Zyrtec purchased locally.

The allergy medicine from Israel worked so well Ward recently ordered a refill from the company, which was launched in January.

MagenDavidMeds is one of a handful of Israeli companies that has sprung up to compete with Canada for drug business from U.S. bargain hunters. These businesses tout not only lower prices, but also market themselves as a way for Americans to show both financial and moral support for Israel.

The new entrants from Israel are attracted to a lucrative business that keeps growing despite U.S. officials' warnings that imported drugs have not been screened by U.S. regulators and may not be safe. Americans reportedly bought nearly $1.5-billion in prescriptions from overseas' suppliers last year. Canada alone did about half the total.

Canada has an edge over other foreign countries because its common language, border and culture give American consumers added ease when ordering drugs from an unknown source.

Ward, for instance, said that while she's comfortable taking an antihistamine from Israel, she prefers to use Canada for the anti-osteoporosis drug Fosamax, whose results she can't see immediately.

"I can't really give a reason for my confidence in the Canadian company," Ward said. "All I know is that I really depend on Fosamax and I know the one I've been getting from Canada for some time works."

Israeli prescription services such as MagenDavidMeds try to overcome customer reluctance by offering Web sites and drug information in English, along with toll-free phone numbers for service. They stress the Israeli government's stringent pharmaceutical standards and its reputation as a source of generic drugs.

Israeli exporters also advertise heavily in Jewish newspapers and magazines in the United States and have been the subject of several articles in these publications.

MagenDavidMeds.com and IsraMeds.com, another Israeli drug broker, are listed in the Jewish Federation of Pinellas' "Blue and White Shop." This directory of Israeli businesses has been compiled by Larry Silver, a former spokesman for Raymond James & Associates who has taken up the project in retirement.

"We want companies headquartered in Israel which have an English Web site and export to the U.S.," said Silver, who said the effort is being supported by 12 Jewish federations in the Southeast. "There's a chance people will buy more Israeli products, which will offset some of the boycotting of Israeli goods done by some nations. And if you're going to buy your drugs from Canada, why not (from) Israel?"

Both IsraMeds and MagenDavidMeds, whose name refers to the Star of David, try to appeal to shoppers' pro-Israeli sentiments as well as their bargain-hunting sensibilities.

"Buying medication from IsraMeds means that up to 70 percent of your money is paid to the Israeli government by means of tax," the company's Web site says. "Especially today, when the Israeli state is confronting the Palestinian terror acts and the worst economical crisis it has known in the last 50 years."

MagenDavidMeds said U.S. orders also show "moral support for the state of Israel."

But Ward, the Palm Harbor shopper, said she didn't consider buying drugs from MagenDavidMeds to be a political statement.

"It never entered my mind," she said.

Like Canada, the Israeli government establishes drug prices, rather than allowing them to be set by the free market as in the United States. The result is cholesterol-production blocker Lipitor that's priced 33 percent lower in Israel than here, painkiller Prevacid that is 63 percent less expensive, and even greater savings on generic versions of brand-name drugs like Zyrtec, which are not available in the United States.

"We looked at the Canadian online pharmacies and asked ourselves if we could replicate this in Israel," said Nathan Jacobson, MagenDavidMeds' founder. "Our generics come from Israel. Our brand names come from FDA- and EU-inspected factories all over the world."

IsraMeds' Web site says the company has been in business for 10 years and served "over 2-million satisfied customers."

Jacobson said that first-year sales at MagenDavidMeds have grown to about 400 U.S. prescription orders, valued at about $66,000, each day.

MagenDavidMeds' Web site suggests that importing prescription drugs to the United States from Israel falls within the guidelines of a 1985 free trade agreement between the two nations. It also says that the U.S. Food and Drug Administration "limits the quantity of medication we can send you to a three-month supply."

Neither statement is accurate, said William K. Hubbard, the FDA's associate commissioner for policy and planning.

He said the sale of prescription drugs to individuals was not covered by the agreement and the three-month supply rule applies only to people with life-threatening conditions who have exhausted therapies in the United States.

"It has nothing to do with a person with diabetes trying to buy a cheaper drug overseas," Hubbard said.

Hubbard said Israel has been vying for U.S. customers for some time, along with newcomers like the South Pacific island of Vanuatu, which gained some prominence last year as an unlikely but low-cost drug source.

Hubbard said that even if some of the foreign exporters are handling drugs made in an FDA-approved factory, once those drugs are taken out of the normal wholesale supply chain, the FDA loses all oversight.

"As far as we're concerned, all these foreign pharmacies are selling drugs which are not FDA approved, so we have to assume there are safety issues with them," Hubbard said, "... There's not enough people at the borders, so these shipments do tend to get through the customs' systems."

Ward of Palm Harbor is aware that her overseas drug purchases are frowned upon by the FDA. But she considers herself a savvy enough shopper to find safe, low-cost drug sources. "None of the drugs I'm taking are being made in the U.S. anyway," she said. "This is just one of those things I cannot agree with the president on. No way."

Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.