Manitoba's Controversial Niche: Exporting Affordable Drugs

Web Pharmacies Offer Prescriptions
To Americans, Jobs to Canadians

By Joel Baglole, The Wall Street Journal

 October 10, 2002

  When Manitoba pharmacist Andrew Strempler listed nonprescription Nicorette antismoking gum for sale at inexpensive Canadian prices on his pharmacy's Web site in December 2000, he thought it would attract a few price-conscious Americans and earn him a few extra dollars.

That initial gum offering has ballooned into RxNorth.com, an online pharmacy that deals in more than 1,000 medications and processes an average of 1,500 prescriptions a day for U.S. consumers. With 170 employees, including 12 pharmacists, the company is the largest employer in the rural community of Minnedosa, Manitoba, which has a population of 2,400.

The sparsely populated prairie province of Manitoba is doing its best to make hay from Americans' demand for affordable prescription drugs -- even though it is illegal for Americans to import drugs from Canada.

During the past two years, 27 online pharmacies with names such as CanadaMeds.com, MedOutletCanada.com and PayLessMeds.com have sprouted up in Manitoba, located north of North Dakota and Minnesota. Manitoba is home to more than half of the 50 licensed pharmacies across Canada that use the Internet to sell prescription drugs, primarily to Americans at cheaper Canadian prices.

While the practice is considered controversial in Canada and the U.S., the provincial government in Winnipeg actively supports the new cottage industry as a job-creation vehicle in an area where traditional farming jobs are drying up. Online pharmacies have created 700 jobs and generate 250 million Canadian dollars (US$156.6 million) in annual revenue in the province of 1.1 million residents, according to the Manitoba government.

The weak Canadian dollar and government policies that cap drug prices enable Americans to save a bundle filling prescriptions through Canadian Internet pharmacies. A two-month supply of breast-cancer drug Novaldex, made by AstraZeneca PLC, costs $220 in the U.S., according to DestinationRx.com, a drug-price comparison Web site. The same amount of Novaldex sells for $42.82 on Canadian e-pharmacy Aptecha.com, which was launched in July by Tommy Janus, a 28-year-old pharmacist, and his brother Victor, a computer programmer.

In the U.S., politicians, drug makers and doctors object on several levels. They are concerned that importing medication from Canada will hurt the U.S. pharmaceuticals industry, as many of the drugs are made in the U.S. and exported for sale within Canada. The shipments also could introduce counterfeit drugs into the U.S. system and harm patients who receive the wrong medication, critics say. North of the border, concerns are that shipping medication to the U.S. will deplete Canada's drug supply.

To get Canadian drugs, American customers must provide their medical history and a credit-card number and sign a waiver that absolves the e-pharmacy of liability. Order forms, downloaded from the Internet, are then mailed or faxed to the online pharmacy, along with a prescription written by a U.S. doctor. The e-pharmacy company has a Canadian doctor review the forms and prescription. If everything looks right, the Canadian doctor co-signs the prescription and the company fills the order and mails it anywhere in the U.S.

Licensed e-pharmacies pay Canadian doctors C$10 for each U.S. prescription they co-sign. Some Canadian doctors earn C$1,000 a day signing prescriptions for Americans they have never met, according to online pharmacists.

Critics say e-pharmacies don't provide patients with the same level of counseling as walk-in pharmacies, there is no doctor-patient relationship between U.S. consumers and Canadian doctors, and Canadian doctors are being paid to rubber-stamp prescriptions.

"We're not comfortable with pharmacists paying doctors a fee to sign prescriptions," says Barbara Wells, executive director of Ottawa-based National Association of Pharmacy Regulatory Authorities. Several Canadian doctors who co-sign prescriptions refused to be interviewed for this article.

Some Canadian Internet pharmacies falsely tell Americans the Food and Drug Administration allows them to import a 90-day supply of prescription medication from Canada. While Congress is debating the issue, it is currently illegal, with minor exceptions, to import prescription drugs from Canada, a senior FDA official says.

But the FDA is exercising "enforcement discretion" regarding medication imports from Canada, the official adds. "We've decided to use our scant resources to crack down on large commercial supplies and narcotics," the official says.

As for mailing medication to the U.S., Canadian regulators say it is up to the U.S. to stop the shipments. "We can't enforce laws on Americans that they don't want to enforce on themselves," says Ronald Guse, registrar at the Manitoba Pharmaceutical Association, the provincial regulator.