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Canada Drafts Curbs on Drug Exports to U.S.
By Clifford Krauss
June 29, 2005
The government announced Wednesday that it was drafting legislation to limit bulk exports of essential Canadian drugs in an effort to ensure that online pharmacy sales to the United States do not cause domestic shortages. But the proposal fell far short of what the online pharmacy industry feared might have forced it to leave Canada altogether.
It is unlikely that the two million uninsured and underinsured Americans who depend on cheaper Canadian drugs to treat chronic conditions like diabetes and high cholesterol will be immediately affected. It is possible, however, that tighter regulations in Canada may give other foreign online suppliers in places like Israel and Britain a new competitive edge and encourage Canadian companies to warehouse more of their inventories in other countries.
"Canada cannot be the drugstore of the United States of America," Health Minister Ujjal Dosanjh told reporters as he announced the legislation and several vaguely defined proposed regulatory changes, including one that could limit some Canadian doctors' practice of co-signing online prescriptions for American patients without examining them.
"We have to make sure that we protect the safety and supply of the drugs for Canadians," Mr. Dosanjh said, "and also the safety of the consumers of these prescriptions."
He added that new regulations were needed because he expected the United States Congress to pass legislation that would allow large imports of prescription drugs.
Online drug sales from Canada to the United States have reached more than $800 million a year, about triple the total of five years ago, although sales have begun to plateau because of price increases linked to the rising value of the Canadian dollar.
The practice has become a thorn in the side of American drug companies, which have increasingly limited sales to Canadian pharmacists who undercut them in American markets. It has also raised concerns among Canadian officials that the exports could eventually reduce supplies and raise prices for Canadians, which would hurt the budgets of provincial governments that finance purchases of prescription drugs.
Since late last year, Mr. Dosanjh has periodically voiced sharp criticisms of the Canadian online pharmaceutical industry, which he has characterized as indulging in unethical practices. His intentions appeared so threatening that many of the largest online pharmacies began placing their inventories overseas and forming partnerships with pharmaceutical companies in Britain, Australia and New Zealand.
But after disagreements among leaders in the governing Liberal party over the risk of destroying an industry that employs 5,000 Canadians, Mr. Dosanjh appeared willing on Wednesday to negotiate on regulations the industry might be able to live with.
"There will be an impact but my intention is not to kill the industry," Mr. Dosanjh said Wednesday.
Industry officials said they welcomed Mr. Dosanjh's proposal to ban bulk exports of drugs to institutions like health maintenance organizations or universities anytime a shortage arises in Canada, saying they remain amenable to supplying individual Americans one at a time.
They also noted that any regulatory changes would not occur until late this year at the earliest. More probably legislation or regulatory changes would not be enacted before a national election, expected early next year.
"We have to hope for the best and prepare for the worst," said Paul Turner, director of sales and marketing at Universal Drugstore, a large online pharmacy based in Winnipeg. "We'd hate to be driven out of Canada, but that could be a reality."
The greatest danger in Mr. Dosanjh's proposals, as industry officials see it, was his opposition to the current practice of Canadian doctors co-signing American customers' prescriptions. The co-signing doctor is required by Canadian law to review the American doctor's diagnosis and prescribed treatment, but does not actually see the
patient
.
Requiring Americans to cross the border to see a Canadian doctor would be so inconvenient and costly that most customers would look elsewhere, industry leaders say.
But some saw the possibility of using technologies like video conferencing and conference calls among Canadian doctors and American patients and doctors.
"I'm looking forward to learning more, and I have to review what he is saying," Robert Fraser, president of the Manitoba International Pharmacist Association. Mr. Dosanjh appeared to leave open the possibility of a compromise on co-signing, saying he wanted to seek solutions with the industry and regulators.
"A doctor-patient relationship always has to be face to face, I couldn't tell you that," he said. But he also said that the current practice "is not appropriate for it to be continuing in the way it has."
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