Once
just a trickle,
Canada
's Rx drugs pouring into
USA
Seniors seek bargains; FDA cracks down
By
William M. Welch,
USA
TODAY
October
7, 2003
It began as a novelty: grannies riding buses to
Canada
in search of cheaper medicines. But today, that search has mushroomed into
a cross-border war that pits desperate consumers and defiant state and
local governments against the powerful pharmaceutical industry and the
Bush administration.
From just a few million dollars a year in 2000, the importation of
price-controlled drugs from
Canada
has grown to a projected $800 million this year and shows no signs of
letting up. ''I've never in my wildest dreams imagined an industry like
this,'' says Andy Troszok, a pharmacist in
Calgary
,
Alberta
, and vice president of an exporters' trade group.
The Bush administration, echoing the arguments of drugmakers, is
fighting the medicine trade from
Canada
and elsewhere as illegal and unsafe.
''They are buying under buyer-beware conditions,'' Food and Drug
Administration Commissioner Mark McClellan says of the estimated 1 million
Americans who import prescription drugs.
The border war is being driven by a rapid rise in the cost of
medications and the frustration of one in four
U.S.
seniors who have no drug coverage. It's also fueled by the tepid economy
and rising unemployment in the
USA
, the ease of long-distance commerce over the Internet and increased
awareness of significantly lower drug prices in
Canada
.
Frustrated by
Washington
's inability to control health costs, Illinois Gov. Rod Blagojevich has
proposed establishing a drug importation program for state employees and
retirees. Governors in
Iowa
,
Michigan
and
Minnesota
are considering similar moves -- steps that would institutionalize the
trade on an unprecedented scale.
State legislatures in
Maine
and
Vermont
passed resolutions this year urging GlaxoSmithKline and other drugmakers
to resume shipments to Canadian pharmacies that had been cut off to reduce
the drug trade. In
Rhode Island
, a bill allowing Canadian pharmacies to obtain state licenses to sell
drugs to Rhode Islanders passed one chamber of the legislature.
The mayor of
Springfield
,
Mass.
, Michael Albano, has begun a drug import program for city workers despite
FDA threats against its supplier, CanaRX Services, which is based in
Ontario
. ''We're mad as hell, and we can't afford it anymore,'' he says. ''They
can't stop this movement.''
Seniors are 'not happy'
For drugmakers, the risk is not simply the loss of money through
Canadian sales. Imports remain a tiny share of the overall
U.S.
drug market, which is expected to exceed $200 billion this year. More
threatening is the potential collapse of a price structure that allows
drugmakers to charge as much as possible in the
USA
while complying with government price controls in other countries.
The price structure ''is unsustainable,'' says Alan Sager, director of
the health reform program at
Boston
University
's
School
of
Public Health
. ''By hugging high prices in a death-grip, the drugmakers increase public
anger and thereby become the main force for legislative action to simply
cut prices.''
Congress has gotten the message. An unusual coalition of liberal
Democrats and conservative Republicans has formed around legislation that
would make it legal for residents and
U.S.
pharmacies to purchase prescription drugs from
Canada
and two dozen other nations. It passed the House July 25, when 87
Republicans deserted their party's leaders and joined 155 Democrats.
The issue faces an uncertain future in the Senate. But the right-left
coalition is creating new pressures on drugmakers, the White House and
Republicans, just as Congress rushes to wrap up for the year.
The president and his party's leaders say part of the solution lies in
their plan to overhaul Medicare. It would reduce drug costs for most
seniors by creating a limited prescription drug benefit for the first
time. Different versions have passed the House and Senate but remain
deadlocked in a conference committee that is working against an Oct. 17
deadline imposed by Republican leaders.
In political terms, President Bush and the GOP, which have received
tens of millions of dollars in campaign contributions from the
pharmaceutical industry, find themselves heading toward an election year
defending drugmakers' pricing practices that charge Americans the highest
prices in the world.
''Seniors have figured out what the pricing strategy is,'' says Rep.
Gil Gutknecht, R-Minn., a sponsor of legislation to legalize imports,
''and they're not happy.''
Bus trips and Internet sales
Americans 65 and older are the largest consumers of health care. Many
take multiple medicines that consume a large share of their fixed incomes.
But traditional Medicare offers no drug benefit, and more than one in four
Americans 65 and older have no coverage through other sources, such as a
former employer, a Medicare-sponsored HMO plan or the veterans health
system. As a result, seniors are a big market for Canadian sellers:
* Mary Music of
Strongsville
,
Ohio
, says her 11 medications for cholesterol, high blood pressure and heart
problems cost her $900 for a three-month supply from
Canada
. Buying them at home, she says, would cost more than $3,000. Since her
first bus trip to
Canada
, the 80-year-old has been ordering her drugs by phone from the same
pharmacy. ''I just think it's a shame that we have to cross the border to
get them,'' she says.
* Lois Gazvoda of
Canonsburg
,
Pa.
, went to
Toronto
for drugs out of desperation when she found herself without health
insurance at age 62 and suffering from diabetes, high blood pressure and
heart ailments. She paid $248 for a three-month supply of drugs in
Canada
that cost her more than $1,000 at her local pharmacy. ''That's a real
savings,'' she says.
* Barbara Flowers, a
Medina
,
Ohio
, retiree who helped organize bus trips to
Toronto
, recalls that on their first trip an older man wept when he got his
prescription filled. He had been doing without medicine so his wife could
afford hers.
''The bottom line to this whole thing is you have ordinary God-fearing
people who live in the
U.S.
who cannot afford their medicine,'' says Mike Hunter, whose pharmacy in
Windsor
,
Ontario
, sees
U.S.
customers cross the bridge from
Detroit
every day in search of less expensive drugs.
Farther west, sales to the
USA
over the Internet have become a big business. Troszok, vice president of
the Canadian International Pharmacy Association, says the boom has
transformed little-developed
Manitoba
province into the hub of the Internet drug industry. With provincial
government approval, the industry has created more than 3,000 jobs there.
While the buses still roll, hundreds of thousands of Americans who lack
drug insurance are taking advantage of
Canada
's government-regulated prices without leaving home. They're using the
Internet, faxes, phones and mail to fill prescriptions.
If that's too complicated for some, entrepreneurs have opened scores of
storefront businesses across the
USA
. They come with unmistakable names such as ''Discount Meds from
Canada
,'' a storefront north of the nation's capital in
Maryland
. They place customers' orders with Canadian druggists and pocket a small
commission.
The
Gaithersburg
,
Md.
, storefront has been operating for six months from a suburban medical and
professional building. Pamela Carter, the wife of the owner, says most
customers want bargain prices without traveling to
Canada
and are leery of ordering over the Internet. She says many are not
retirees but working people who lack drug coverage.
'We are enforcing the law'
While acknowledging they cannot stop the importation of cheaper drugs,
the FDA and Justice Department have begun efforts to crack down on
cross-border drug sales and an Oklahoma-based chain of storefront sellers.
A federal judge in Tulsa will convene a hearing Wednesday on a Department
of Justice lawsuit seeking to shut down Rx Depot, a chain of 85
storefronts in 26 states that acts as a liaison for consumers buying
medicines from Canada.
''We are enforcing the law,'' McClellan says. ''FDA's job is to assure
drug safety in the
United States
, and unapproved, imported drugs are illegal because FDA does not have the
resources under current law to assure their safety.''
The pharmaceutical industry has begun to retaliate, too.
U.S.
drugmakers have curtailed sales to certain big Canadian sellers and have
threatened to limit supplies to others. ''Every relevant agency from the
FDA to the DEA (Drug Enforcement Administration) has sharply criticized
imported medicines as unsafe,'' says Jeff Trewhitt, spokesman for the
Pharmaceutical Research and Manufacturers of America, the trade group of
name-brand drugmakers.
U.S.
pharmacies, understandably, don't like to see business move to their
Canadian counterparts. Craig Fuller, CEO of the National Association of
Chain Drug Stores and a former aide to President Reagan and Vice President
Bush, calls for more government enforcement to stop imports. ''We have
laws on the books, and those laws ought to be enforced,'' Fuller says.
Sen. Rick Santorum, R-Pa., who opposes the drug trade, says importation
threatens to undercut drugmakers' profits that pay for research on future
breakthroughs. ''People love to beat up on this industry,'' he says.
McClellan, an economist and doctor who was an aide to Bush before
moving from the White House to the FDA, agrees drug prices are too high in
the
USA
. He says a Medicare prescription drug benefit is one solution; another is
for other nations to agree to higher drug prices. ''They do have an
obligation to share the cost of developing new medication,'' he says.
Critics, however, say profits -- not safety or research -- are at
stake. Drugmakers enjoy a tax break for research and development and spend
lavishly on advertising and lobbying. ''They cannot tell you a single case
they've discovered of anybody getting ill'' from Canadian drugs, says Rep.
Rahm Emanuel, D-Ill.
The drug industry is one of the most powerful lobbies in
Washington
. It employs hundreds of lobbyists, more than one for every member of
Congress, to fight any threat on Capitol Hill. One of them is Tony
Feather, who was political director of the Bush-Cheney campaign in 2000.
Drugmakers give money to both parties, but Republicans receive by far
the most. In 2002 election campaigns, the industry gave $22 million to
Republican candidates -- three-fourths of all its political contributions,
according to the Center for Responsive Politics. In 2000, Bush was its top
recipient, collecting nearly $500,000. The top four drug companies --
Pfizer, Bristol-Myers Squibb, GlaxoSmithKline and Eli Lilly & Co. --
each gave 80% or more of their donations to Republicans that year.
Opposing price controls in the
United States
is an overriding concern for the drugmakers. ''We don't want somebody
else's failed, government-mandated, price-fixing schemes being brought
into this country,'' Trewhitt says.
But the savings available from
Canada
are so great -- 85% less than
U.S.
prices on some drugs, such as the breast-cancer treatment Tamoxifen --
that they are impossible to ignore. An overwhelming 71% of Americans in a
recent USA TODAY/CNN/Gallup Poll supported legalizing prescription drug
sales from
Canada
.
President Clinton signed such a bill in 2000, but it contained a
loophole requiring the nation's health and human services secretary to
certify the safety of imports before they would be permitted. Neither
Clinton
's secretary nor President Bush's, Tommy Thompson, has made that
certification. The House bill passed in July would drop that requirement
and permit sales not just to citizens but to drug stores, too.
It was the one bill that could bring together lawmakers such as Reps.
Dan Burton, R-Calif., a conservative who relentlessly pursued
investigations of Clinton, and Bernie Sanders, I-Vt., a socialist who led
some of the first bus trips to Canada in the late 1990s.
Burton
cites his wife's unsuccessful battle with breast cancer and the high
prices American women pay for cancer treatments. He accuses the FDA of
acting ''in lockstep with the pharmaceutical industry'' to protect prices
and profits. ''They are allowing the theft, this robbery, to go on,'' he
charges.
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