The FDA estimates that over two million shipments of prescription drugs
will cross the border from Canada to the U.S. in 2003. While importing
medicines is technically illegal, the FDA, until recently, has turned a
blind eye on much of the border trade. As long as seniors on bus trips
from northern states into Canada -- like the ones organized by the Alliance for Retired Americans -- carry only enough drugs for personal use and provide
documentation from their U.S. doctors, the FDA has allowed the shopping
Many American seniors have turned to the Internet and mail order services to fill their prescriptions at Canadian prices. According to the Manitoba International Pharmacists Association, a regional association of online pharmacies, around 1 million U.S. residents obtain drugs they otherwise could not afford through Canadian online/mail-order pharmacies every year. Storefront operations acting as middlemen between American customers and Canadian pharmacies are popping up in dozens of states in the U.S. These operations send consumers' prescriptions and credit card information to Canadian partners, who then obtain a prescription from a Canadian doctor, fill that prescription, and send the drugs directly to the U.S. customer.
Concerned by the threat to their profits, some drug companies are striking back. In March 2003, GlaxoSmithKline, a UK-based pharmaceutical giant that manufactures blockbuster drugs such as Paxil for depression, the antibiotic Augmentin, and the ulcer medicine Zantac, cut sales to Canadian pharmacies shipping to America. Soon after, AstraZeneca, another major supplier, did the same. If more companies follow suit, the supply of drugs available could dry up.
+ INTERPRETING THE LAW
Reimportation of prescription drugs by anyone other than the
drug's manufacturer, is a violation of federal law. But FDA enforcement guidelines allow
agents to exercise discretion for drugs imported for personal use.
According to the guidelines, "FDA personnel may consider a more
permissive policy" in cases where an individual seeks to import no more
than a three month supply of a product that does not appear to pose an
unreasonable risk, if the individual affirms in writing that it is for
personal use and provides the name and address of the U.S. doctor
supervising their treatment.
Advocacy groups cite these guidelines as proof that reimportation is
legal. But in a February 2003 letter, the FDA's Associate
Commissioner, Thomas Hubbard, said the guidelines have been
misinterpreted. They were meant to allow FDA agents discretion in
allowing U.S. citizens access to medicines for serious conditions that
were unavailable or hard to find in the states, not to allow
international comparison price shopping.
The FDA says that it's most concerned about the safety of the imported products. Drugs from foreign pharmacies, which are not subject to the agency's jurisdiction, could be mislabled, counterfeit or otherwise adulterated. Consumers buying those drugs would have no recourse if they suffered adverse effects.
+ A COMING CRACKDOWN?
The publication of Hubbard's letter seemed to signal a new tough policy by the FDA and state pharmacy boards. Although enforcement resources make it unlikely that individual consumers will be prosecuted, the FDA and state agencies are threatening to shut down many of the commercial storefronts that act as middlemen between U.S. customers and Canadian pharmacies.
A recent controversial court decision in the FDA's favor may mark the beginning of the end for these businesses. On November 6, a federal judge ordered two of the biggest of the storefront companies, the Oklahoma based Rx Depot and the Nevada based Rx of Canada, to be closed. The companies are both owned by the same man, Carl Moore, and comprise 88 stores in 27 states. U.S. District Judge Claire Eagan sided with the FDA and the Justice Department's arguments that the companies were operating in violation of the Federal Food, Drug and Cosmetic Act, and presenting a significant risk to public health.
Eagan recognized the difficulties of U.S. consumers facing ever-increasing drug costs, but nevertheless ruled that the companies must be closed: "This court is not unsympathetic to the predicament faced by individuals who cannot afford prescription drugs at U.S. prices," Eagan wrote. "However, the defendants are able to offer lower prices only because they facilitate illegal activity determined by Congress to harm the public interest."
Internet pharmacies are harder to regulate than storefronts like Rx Depot, however, and the FDA remains concerned that U.S. consumers may be getting unsafe, unregulated products from foreign Internet pharmacies that operate outside the agency's jurisdiction.
+ THE SAFETY ISSUES
Advocates for cross-border importation say the safety concerns cited by the FDA and drug companies are overblown, at least with respect to drugs imported from Canada. "While there is some concern about counterfeiting or misbranded products being marketed in various countries, this is not the case in Canada, " said Congressman Dan Burton (R-Ind.), testifiying at a House Government Reform Committee hearing in June 2003. "The drugs under discussion are U.S. manufacturered, FDA approved, subject to all the laws and regulations of the Canadian government while in Canada, and are sold by highly regulated and licensed Canadian pharmacies. While claiming that these purchases endanger Americans, the drug companies and the FDA have failed to provide any proof whatsoever."
Burton is a co-sponsor of HR 847, "Preserving Access to Safe, Affordable Canadian Medicines Act of 2003," which would prohibit drug manufacturers from implementing contract provisions or limitations on supply (like GlaxoSmithKline's restrictions on shipments to Canadian pharmacies selling to Americans) that would limit American consumers' access to drugs on the Canadian market.
There is already a law on the books which, if implemented, would legalize the importation of drugs from Canada into the U.S. In 2000, Congress amended the Federal Food, Drug and Cosmetic Act, instructing the secretary of health and human services to promulgate regulations for importing prescription drugs by consumers, pharmacists, and wholesalers, if the secretary determined that the practice would not pose a public health risk. HHS secretaries in both the Bush and Clinton administrations have refused to implement the law, citing safety concerns.
In addition to HR 847, a number of additional bills making it easier to import drugs from Canada have been filed: H.R. 780, introduced by Rep. Marion Berry (D-Ark.), would force the 2000 law into implementation, and H.R. 616, sponsored by Texas Republican Ron Paul, would limit the prosecution of Internet drug sales, provided they were done in accordance with FDA rules.
If Congress passes a prescription drug benefit for Medicare in 2003, the effect on the market for drugs from Canada or other countries with lower prices remains to be seen. While many seniors may find their prescription costs cut with the new Medicare coverage, there likely will be many others who still will find Canadian prices enticing, after accounting for deductibles and co-payments.