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Canada Fills U.S. Prescriptions Under the Counter

By GARDINER HARRIS

New York Times, June 4, 2003

Amanda Hollmann, left, and Barbara Harbin act as brokers for people seeking medicine from Canada through their store in Boca Raton, Fla.

BOCA RATON, Fla. - With just three computers, a fax machine and two paper shredders, a tiny storefront operation next to a Dunkin' Donuts shop here hardly seems a threat to the pharmaceutical industry.

But by helping customers arrange to purchase legal drugs at steep discounts from Canadian pharmacies, compared to the prices at nearby pharmacies, Discount Rx Connection and scores of similar stores around the country are part of a revolution in the American drug market.

Drug company executives say the discount stores, which generally make a small commission for arranging each order and delivery, threaten their ability to invest in medical research, and the companies have begun limiting shipments to their Canadian suppliers. Health regulators say the stores, which often operate without regulatory oversight or even licensed pharmacists, are a danger to public health, and they have begun a crackdown.

Still, even if regulators succeed in closing the stores, the underground importation of drugs is already shifting to a more elusive sales channel: drug parties akin to those for Tupperware.

The parties and the discount stores, which refused to discuss their precise fees, are the latest manifestation of the conflict created by the enormous differences in prescription drug prices around the world. Even as governments in almost every industrialized country mandate steep cuts in drug prices, American consumers are paying among the highest prices in the world, and those prices are increasing annually.

The rising prices have led many Americans, especially elderly consumers on fixed incomes, to reach across international borders for their medicines. Cross-border prescription drug sales have soared to as much as $650 million annually, according to IMS Health, a company that tracks drug sales.

Federal regulators largely looked the other way when consumers first began to obtain prescription drugs from Canadian pharmacies through Web sites. But now that retail outlets are opening in the United States, federal and state health authorities are taking action.

[On Tuesday, Judge Bryan C. Dixon of Oklahoma County District Court in Tulsa granted an injunction requested by the Oklahoma State Board of Pharmacy to close an Rx Depot there but put the closing on hold pending an appeal.]

The F.D.A. is mulling its next move after sending a warning letter on March 21 to an Rx Depot in Lowell, Ark., outlining why the entire industry violates federal law.

"We see a lot of drugs coming in the mail that are counterfeit," said Bill Hubbard, an associate commissioner of the F.D.A. "Patients are gambling with their health."

Neither Canadian health authorities nor the F.D.A. guarantee the safety of drugs imported from Canada.

But Barbara Harbin, the proprietor of Discount Rx Connection here, denies there is any problem with the quality of the medications she helps obtain. A 44-year-old wife, mother and former Catholic-school fund-raiser, she said that she would never do anything to hurt her patients and that she even helped her father order drugs.

She will only close her store, she says, if Congress passes a Medicare drug benefit that will satisfy the enormous demand among the elderly for cheaper prescription drugs.

"If they try to shut us down without putting a drug plan into place, we'll fight it," she said.

Harriet Cohen dropped into Ms. Harbin's store today to check prices after going to a dental appointment nearby. At 72, Mrs. Cohen said she was worried about paying for her diabetes drugs and the many medicines that her husband, Leonard, desperately needs for a failing heart and emphysema.

Mr. Cohen is a prime candidate for the types of drugs brokers by Discount Rx Connection and similar stores. Because it can take up to three weeks for drugs to arrive, most orders through the stores are for pills taken chronically, such as hypertension drugs. (Prescription narcotics are not generally available.)

Mrs. Cohen buys some of her husband's drugs from the Department of Veterans Affairs, some from a pharmacy run by their insurer, Humana Inc., and some from stores like Discount Rx Connection. Although she has a computer and knows she can order the drugs online herself, she is hesitant to do so. "I just don't trust it," she said. "I like to talk to people face-to-face."

"They started a rumor that there's something wrong with the drugs from Canada, but that's just because they want you to stop taking them," Mrs. Cohen said. But the pharmaceutical industry says it depends on unregulated drug prices to pay for its research into new medicines.

"We believe there would be more innovation if price controls were lifted" abroad, said Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America, the industry's trade group.

Indeed, as Europe clamped down over the past two decades it lost its lead in pharmaceutical innovation. Even some of the large drug companies still based in Europe, like GlaxoSmithKline and Novartis, are shifting many of their operations to the United States. And the biotechnology industry — where much of the innovation on drugs is now focused — is almost entirely American-born.

Several large drug companies are now going so far as to limit shipments to Canada to keep pharmacies there from filling prescriptions from the United States. GlaxoSmithKline said it recently curtailed shipments to Canadian pharmacies exporting to the United States, and AstraZeneca said it was limiting shipments to Canadian customers that were placing orders much larger than usual.

For their part, regulators are concerned about the lack of oversight of the new stores. Pharmacies in the United States must be licensed and employ licensed pharmacists, and most of the new stores do neither.

In addition, the new stores "make the regular guys look bad because seniors go there and think they've been getting ripped off," said Hal Wand, deputy director of the Arizona State Board of Pharmacy.

Jim Detweiler, a pharmacist at Boswell West in Sun City, Ariz. who objects to the new discounters, complained, "If anybody can import from Canada, why can't we?"

Ms. Harbin of Discount Rx Connection says stores like hers do not have licenses because they do not actually sell drugs. Instead, they "facilitate" a transaction between patients and Canadian pharmacies. Mrs. Harbin shreds the copied prescriptions and medical-history forms her customers give her as soon as her Canadian counterpart signals that the forms have been received.

"We are not a pharmacy; we keep no health records here," she said.

Some of the operators of the new stores say they have been stymied in their efforts to obtain regulatory approval. Joel Korsunsky moved from the Canadian province of Manitoba last year to open Prescriptions Drugs Canada in Scottsdale, Ariz., and offered to seek pharmacy licenses and hire licensed pharmacists, he and the pharmacy board said. But the Arizona State Board of Pharmacy told him he could not get licenses because he was selling Canadian drugs, they said.

"It's like they're complaining that we're living in sin and that we ought to get married but they won't marry us," Mr. Korsunsky said.

Many state health officials still do not believe the stores break any state laws. "These things are not pharmacies," said Leo Roberge, director of drug control for the Connecticut Department of Consumer Protection. "They are acting as a broker and that doesn't come under our pharmacy law."

Because the new stores are not pharmacies, Mr. Roberge said, they do not need pharmacy licenses, and because they do not have pharmacy licenses, they are not subject to state law.

But Mr. Wand and pharmacy board officials in other states have decided that the Canadian drug stores are indeed acting like unlicensed pharmacies because they collect patient information.

"If a patient walks in with a prescription and hands it in along with their health profile and that store keys it into a computer, that's practicing pharmacy," said Jerry Moore, executive director of the Alabama Board of Pharmacy, who is trying to shut down stores there.

Mr. Hubbard of the F.D.A. said the agency's recent letter to Rx Depot "was meant as a warning to this entire new industry. If they don't stop, both the state and federal government may have to get more active in pursuing them."

Ending drug-sale parties will be much more difficult than closing stores, state regulators say. Ron Ewing, an investigator for the Arkansas State Board of Pharmacy, recently attended one of these parties at a retirement home as part of an ongoing investigation. A representative of a Canadian pharmacy handed out drug-price comparisons along with refreshments, Mr. Ewing said. Anyone wanting to purchase cheaper drugs was asked to fill out a form and provide a copy of a prescription.

"There's a tremendous amount of money to be made by these middlemen," said Charles Campbell, executive director of the Arkansas Board of Pharmacy. "But we want to go on record that this is a threat to the public health."

The warnings do not appear to be intimidating the operators of the new stores. Undaunted by regulators' concerns, Rx Depot's president, Carl Moore, is opening more outlets as fast as he can. "We are absolutely going to survive this," he said.