Border Crossings

Cross-border sales of prescription drugs to American customers may not threaten Canadians as much as before, but they’re still a cause of friction and concern

BY SALLY PRASKEY

As late as last May, pharmacy associations, pharmaceutical distributors and patient-advocacy groups were lobbying vigorously against a renewed threat to the Canadian prescription-drug supply as a bill to legalize the bulk import of drugs—introduced as an amendment to the FDA Amendments Act—reached final stages in the U.S. Senate. While such a move would allow easier access to affordable drugs for Americans, it could also lead to drug shortages in Canada.

Ultimately, the Senate chose to strike the controversial importation amendment to ensure the President would sign the Act into law. The issue of cross-border pharmacy has since shifted to the backburner, partly due to the strength of the Canadian dollar and partly to the introduction in the U.S. of Medicare Part D. This new drug-benefit plan gives those with Medicare coverage prescription-drug benefits—much like an insurance plan—although patients must still pay deductibles and premiums.

But the subject isn’t likely to fade away entirely. Democrats, who currently control the U.S. congress, have made legalizing the import of cheaper drugs from Canada a priority; it’s anyone’s guess what might happen if they win the upcoming presidential election.

How it works
There are three main ways in which U.S. consumers can access Canadian pharmacies:

Storefront businesses in the U.S. A U.S. customer brings a prescription to a storefront processing centre in that country. The prescription is then sent to a Canadian pharmacy, where a Canadian physician rewrites the prescription to make it valid in Canada, and it is filled and shipped to the customer.

Internet A U.S. customer accesses a pharmacy website to download order and information forms. The customer then faxes a copy of his or her prescription, along with the prescribing doctor’s information, personal information and payment to a Canadian-based online pharmacy.

Personal shopping Many Americans simply cross the border to get their prescriptions filled in person. Dedicated drug-buying bus tours were all the rage when cross-border pharmacy was booming.

Our price is right
There are a few reasons why Canadian prescription drugs are so much cheaper than their American counterparts. First of all, the exchange rate gave Americans a much bigger bang for their buck in the heyday of the cross-border pharmacy around 2003. But perhaps the Canadian regime of drug-price controls has been the biggest reason for the price disparity. The Patented Medicine Prices Review Board—a quasi-judicial government body created in 1987—monitors and regulates drug prices in a kind of trade-off for the 20-year patent protection given to brand-name drug companies to recoup the cost of their R&D.

Finally, Canadian drug companies are also not allowed to market their products directly to consumers, whereas the U.S. has allowed this since 1997. According to the Pharmaceutical Research and Manufacturers of America, drug companies spend almost $3 billion annually on direct-to-consumer advertising, a cost that gets passed on to consumers.

Legislative (in)action
The previous Liberal Government introduced measures in 2005 to protect Canada’s prescription-drug supply. The current Conservative Government, however, does not view this as a priority, and has suggested it will act only if the Americans move to legalize bulk imports.

In October 2006, a private member’s bill (C-378) was introduced in Parliament to amend the Food and Drugs Act to provide the Minister of Health with the authority to ban bulk drug exports. This bill, however, never got off the ground.

Meanwhile, the U.S. Congress passed legislation in September 2006 permitting importation of 90-day supplies of Canadian prescription drugs via “foot traffic” by American patients.

Shrinking market
The cross-border trade in prescription drugs began in 2000, when two different groups of phar macists in Manitoba began to market healthcare products over the Internet, and was worth $1 billion annually at its peak in 2003. According to U.S. Food and Drug Administration, Americans were receiving more than two million packages of prescription drugs per year.

Not anymore. Data published earlier this year by IMS Health Canada revealed that Canadian Internet pharmacy sales to the U.S. were down a whopping 50 percent in 2006 compared with the previous year—from $420 million to $211 million. Declining sales have now been observed for every quarter since June 2004. In the last quarter of 2006, Internet pharmacies made shipments worth only about $40 million.

As a result of the decrease, several Internet-based pharmacies have consolidated, downsized or left the industry altogether. As of 2006, about 1,000 jobs had been lost, from a peak of about 4,000 in late 2004. In Manitoba, birthplace of the industry, the number of cross-border pharmacy licences issued by the province’s regulator fell to 36 in January 2006 from 45 in March 2005 and 64 in January 2004.

Still a concern
In defiance of federal law, bulk importation of prescription drugs continues in several states. The most prominent example has been the I-SaveRx program, created in 2004 by Illinois Governor Rod Blagojevich and open to residents in Kansas, Wisconsin, Missouri and Vermont. In September 2006, Blagojevich announced that he would expand the program, previously available to senior citizens and the uninsured, to state employees and their dependents.

The I-SaveRx program, part of the State of Illinois’ official website, is administered by an Alberta company called Pegasus Health Services Ltd.

Blagojevich has vowed to keep the program alive despite its flagrant violation of the law, saying: “We fully intend to continue allowing the people of Illinois to purchase safe, affordable medicine from approved pharmacies in Canada, the United Kingdom, Australia and New Zealand.”

In another initiative in March 2006, the Nevada State Board of Pharmacy began to license Canadian pharmacies as out-of-state pharmacies.

While not as frequent or intense as they were three or four years ago, the battles over cross-border pharmacy are clearly still being fought.

The real thing?
The CPhA cites several reasons why cross-border pharmacy is harmful:

• With pharmaceutical suppliers putting caps on the amount of drugs shipped in Canada while the volume of exports increases, there is strong potential for drug shortages at home.
• Internet pharmacies may not have complete drug and allergy profiles for patients, limiting the ability of the pharmacist to monitor drug therapy, including drug interactions and allergies.
• The drug-distribution process may be compromised (through improper labelling, storage or handling, for example).
• Prescriptions could be faxed to multiple online pharmacies, increasing the potential for drug diversion and illicit drug use.
• Provincial pharmacy and medical licensing authorities are overburdened by the task of regulating the export of prescription drugs.
• The number of pharmacists dedicated to filling prescriptions and providing care to patients located outside Canada could exacerbate the current pharmacist shortage in this country.

Consumers deal with Internet pharmacies at their own risk. A number of suppliers falsely advertise themselves as Canadian, and U.S. Customs statistics of mail-order seizures show that at least 10 percent of packages from purportedly Canadian sources have contained counterfeit or fake drugs. The World Health Organization estimates that more than half the drugs purchased online from sites that conceal their true physical address are counterfeit.

Earlier this year, Canada reported its first confirmed death from counterfeit drugs purchased over the Internet. A B.C. coroner’s report concluded that pills bought from a fake online pharmacy were to blame for the March death of a Vancouver Island woman. The drugs were contaminated with extremely high quantities of metal. Says CPhA Executive Director Jeff Poston: “Many Internet pharmacies claim to be Canadian, but in fact can be based anywhere in the world. A Canadian flag is no guarantee—nor can the origin and safety of drugs bought online be guaranteed.”