RICK KARR: The battle between the state of Maine and the pharmaceutical industry started in Portland when the city found a way to cut its health care costs. By the time the battle ends, the whole country might feel the effects. If Maine wins, it could get a lot easier for Americans to import cheaper prescription drugs. If the pharmaceutical companies and their allies win, importing drugs could be harder than ever. One side in the battle is made up of employers — and their employees. They say they’re fighting for the right to spend less on health care.
RICK KARR: How much money does this save the company every year?
SCOTT WELLMAN: About $400,000. That’s our savings per year.
RICK KARR: The other side includes Maine’s pharmacists and retailers and the pharmaceutical industry. They say they’re fighting to protect the safety of consumers who might be tempted to try imported prescription drugs.
AMELIA ARNOLD: The problem is, is that these medicines aren’t safe.
RICK KARR: The battle started in 2004, when Portland offered its 1,400 employees the option of a new prescription drug plan. Instead of going to local pharmacies to get their prescriptions filled — and paying a share of the cost — they could get the drugs by mail from licensed pharmacies in Australia, New Zealand, Canada, and the U.K. — without paying a penny. City employee Jeff Tardif signed his 7-year-old son up for the plan this year to get asthma meds.
JEFF TARDIF: My big thing is I’m saving money. So, you know, it’s 100 bucks that I’m saving monthly– through this program.
RICK KARR: Karen Percival gets drugs that treat chronic pain and ADHD. Every three months, a fresh supply from a pharmacy halfway around the world lands on her doorstep.
KAREN PERCIVAL: It shows up in a box like that. It’s odd that it comes all the way from Australia, and it still costs less money.
RICK KARR: The program’s managed by a Canadian company called CanaRx. It tracks the prices of prescription drugs in four countries. Whichever country has the lowest price on a drug supplies it — from licensed, brick-and-mortar pharmacies.
Take the example of a three-month supply of the asthma drug Advair: Under the city’s regular health plan, at Portland pharmacies it costs a little under $600. The CanaRx plan imports it for a little over a $150 — shipping included. With discounts like that, the city of Portland saves $200,000 a year on health care — and there’s no copay for employees. Two years after the city launched its program, the largest employer in one of Maine’s poorest counties followed suit. Hardwood Products makes food sticks — the wooden handles that go into popsicles, ice cream bars, corn dogs, and so on. Chief financial officer Scott Wellman says the family-owned company can do a lot with the $400,000 a year it saves on the plan.
SCOTT WELLMAN: That money can be used for employee raises. That money can be used to offset the cost of their health care. It also can be used to invest in equipment so we can produce new products.
RICK KARR: Early last year, the state of Maine’s employee health care program decided to offer the CanaRx option. Overnight, the number of people eligible for the plan in Maine went from about $3,200 to more than $33,000. And that’s when Maine’s pharmacists decided they had to do something to stop it.
AMELIA ARNOLD: When we found out that the Maine State Employees Union was going to be contracting with this organization, CanaRx, we realized that it was against both state and federal law at that time.
RICK KARR: Maine pharmacist Amelia Arnold and other opponents of mail-order drugs say the imports violate the Federal Food, Drug, and Cosmetic Act and that they ran afoul of state law because Maine’s pharmacy board hadn’t licensed the foreign pharmacies to practice in the state. Arnold admits that Maine residents have been crossing the border into Canada for years to get cheaper drugs from retail pharmacies — like these seniors did in the early 2000s, before the federal government expanded Medicare benefits. But she says mail-order pharmacies in Canada may operate with no oversight and low standards.
AMELIA ARNOLD: Who’s going to police that? Who’s going to find out that the pharmacy’s legitimate? Those companies can participate in what we call parallel importation. So they can get their drugs from other countries. So just because it’s coming into the U.S. from Canada doesn’t mean that it started in Canada.
RICK KARR: Arnold says the medicines might be old, ineffective — or even counterfeit. [In September of last year,] Maine’s then-attorney general agreed with the pharmacists that importing drugs violated state law. So CanaRx suspended all three of its programs in Maine.
SCOTT WELLMAN: We were very angry — would probably be the best way of putting it.
RICK KARR: Scott Wellman says the ruling inflicted a lot of pain on the employees of Hardwood Products.
SCOTT WELLMAN: They had to make the decisions on, “Okay, do I turn the heat down in the winter? What do I do?” Because they stopped taking one– while the program was suspended.
RICK KARR: Wellman decided it was time to push back, so he reached out to a local firewood dealer.
DOUG THOMAS: You don’t get to take advantage of people. “I have this drug, this pill, and it will save your life. What will you give me for it?” is that the way we do business in the United States? And, of course, you’re going to pay whatever you have to to save your life. And that’s not right. It’s real close, I think, to holding a gun to people’s head. And it’s wrong.
RICK KARR: Doug Thomas sells firewood and serves as a Republican state senator. He calls himself a conservative, says he hates unions and believes in free enterprise and competition. He also thinks the pharmaceutical industry needs more regulation.
DOUG THOMAS: The drug companies have done a very good job at telling people that they need all this money for research and development, and if we don’t give them everything they want, then we’re not going to have these new drugs. And that’s, I just– I absolutely don’t believe it. The Canadian system works. The Australian system works. The drug delivery system in New Zealand works. And it can work better here.
RICK KARR: Thomas introduced a bill that legalized pharmaceutical imports. So did one of his Democratic colleagues. They rolled their bills into one and joined forces … and both sides of the issue sent their lobbyists to work.
SCOTT WELLMAN: I believe there were four of us that were lobbying on behalf of the bill; there were at least 12 lobbyists from– representing pharmacies and big pharma.
RICK KARR: The pharmacists and drug companies argued the bill would endanger the people of Maine. But in June, the bill passed both houses with bipartisan majorities. Maine became the first state in the nation to legalize mail-order drug imports. In September — a month before imports could resume — the pharmaceutical industry and its allies filed a federal lawsuit to strike down the law.
JOHN A. MURPHY III: There’s several things wrong with the Maine law. Not least of which is the fact that it violates the federal Food and Drug Administration’s laws prohibiting the importation of prescription medications outside of the F.D.A.’s regulatory construct.
RICK KARR: John Murphy is a staff lawyer at PhRMA, the drug makers’ trade group and one of the plaintiffs in the suit. He says federal law gives the Food and Drug Administration the authority to regulate drug imports, and that authority’s illegally undercut by the Maine law.
JOHN A. MURPHY III: Effectively, it permits patients to go onto the Internet, which is completely unregulated, and bring prescription drugs into the United States outside of even the F.D.A.’s– large– federal preview. It’s– very concerning.
RICK KARR: Like Maine pharmacist Amelia Arnold, who’s one of the lead plaintiffs in the suit, Murphy says stopping mail-order imports is all about safety. They say most drugs have cheaper generic equivalents, so there’s no need to take a chance on foreign pharmaceuticals. Murphy says that in 2003, the F.D.A. warned CanaRx that it was “put[ting] the health of the American public at risk” after the company mailed an order of insulin — a perishable drug that has to be refrigerated. CanaRx says as soon as that happened, it stopped offering perishable drugs and that it has safeguards in place to protect its customers.
RICK KARR: What a lot of the people in Maine have been saying to me they’re saying, “These are the same drugs that are available in the U.S. These are drugs that they’re getting that are made by members of your organization.”
JOHN A. MURPHY III: And they’re able to test those drugs when they come home and verify that they are? Or that they just have a label on them that indicates that they are the same drugs? I mean, that’s the interesting question, right? I mean, no one who’s personally importing a drug into the United States and bringing it to their home has really any idea what’s in that drug. And in fact, we’ve seen even in the past that drugs that came in through Canada, certain cancer drugs, were sold to physicians. And physicians weren’t able to verify the authenticity of those products.
RICK KARR: The response that we get from PhRMA and the pharmacist association is you never know for sure how reliable these pharmacies are. And it’s too late if somebody gets sick on account of this. Does this concern you at all?
SCOTT WELLMAN: With our experience, it doesn’t. The pharmacies that were having to fill these prescriptions are licensed retail pharmacies. If you’re getting, for example, Crestor, you get Crestor in the Astrazeneca package labeled with all their information, with a pharmacy label on it, with the seal on the outside of the package, lot number, date code, everything is on the package. You can trace the pedigree just like you can in the U.S.
RICK KARR: Wellman says he knows what he’s talking about because he’s also CFO of Hardwood Products’ sibling company, Puritan Products, right across the street. It makes medical supplies.
SCOTT WELLMAN: We have lots and date codes. We have expirations. We make F.D.A.-registered devices here. We have F.D.A. audits that come in here. We understand– how that process works.
RICK KARR: Wellman says he hopes the state of Maine prevails in court so more of his neighbors can take advantage of the lower prices on foreign drugs. If Maine does win, other states are likely to follow its lead by allowing mail-order imports. The date of opening arguments in the case, when the battle moves to the courtroom, hasn’t been set.