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Read Making a Killing

home / healthcare / in the media

The Wall Street Journal
Jun 30, 2005

by TAMSIN CARLISLE and CHRISTOPHER CONKEY

Canada May Ban U.S. Drug Sales When Supply Falls

Canada's government is drafting laws and regulations that could have a big impact on Canadian pharmacies conducting $1 billion in sales of prescription drugs to U.S. patients.

The effort is proceeding on two fronts. Canada's health minister said he intended to work with others to close a loophole that allows Internet pharmacies to ship cheap drugs to Americans. At the same time, the minister, Ujjal Dosanjh, said Canada would draw up legislation giving it authority when necessary to prohibit bulk sales of prescription drugs to the U.S., as a way of maintaining domestic supplies.

The bulk-sales legislation would seek to counteract a proposed U.S. bill that would permit some states to buy medicine in bulk from Canada, where prices are generally lower because of limits on what companies can charge.

The appetite of Canadian lawmakers for change is high. Mr. Dosanjh, who has been discussing drug-sales curbs since early this year, is determined to pursue the issue. He cites concerns about possible drug shortages in Canada, and safety issues relating to lack of oversight for cross-border sales.

The minority Liberal government in late September is to unveil draft legislation banning online bulk drug exports, Mr. Dosanjh said. Meanwhile, his efforts to control sales to individual consumers in the U.S. are less clear-cut -- in part because he agreed to hold detailed talks with Canadian pharmacy and physician groups before crafting specific changes.

Mr. Dosanjh wants to close the regulatory loophole that allows mail-order pharmacies to fill orders from individual U.S. customers by having Canadian physicians countersign U.S. doctors' prescriptions. "Canada can't be the drugstore for the U.S.," Mr. Dosanjh said, adding, "if there is an existing relationship between a U.S. patient and a doctor licensed to practice in Canada, those prescriptions would be protected."

In the worst-case scenario for Canadian Internet pharmacies, only the very small minority of U.S. residents with face-to-face access to Canadian-licensed doctors -- such as retired Canadians living part-time in the U.S. -- would be able to receive mail-order drug deliveries from Canada.

Mr. Dosanjh said that this would have an impact on the nation's profitable Web-based drug trade, which has been operating about five years. Such a face-to-face requirement, though, would help Canada avoid retaliation from U.S. drug companies, which have cut shipments to Canadian wholesalers supplying the Internet pharmacies that ship the cheaper drugs.

"If the government wants to press this to be face-to-face, there's no doubt that would be detrimental to our industry," said Andy Troszok, president of the Canadian International Pharmacy Association. "Over time, it would shut it down," he added. The association represents about 40 Canadian pharmacies providing mail-order service to international customers, mainly in the U.S.

The issue of bulk sales is less pressing. Canadian Internet pharmacies aren't allowed to make such exports, and Canadian drug wholesalers would risk being cut off by U.S.-based pharmaceutical manufacturers if they got involved. In any event, the Food and Drug Administration most likely would block U.S. bulk imports, whereas it has turned a blind eye to smaller quantities of Canadian drugs crossing the border.

Canada's only current bulk exports of drugs are from pharmaceutical manufacturing plants located in Canada -- a business encouraged by Canada's government and protected by international trade laws.

U.S. drug makers oppose the importation of drugs from abroad, be it Canada or elsewhere. Reacting to Mr. Dosanjh's remarks, Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said that without strong FDA safety protocols, the group remains "opposed to importing drugs from foreign countries either in bulk or through the Internet."

U.S. legislation sponsored by two senators, Republican Olympia Snowe of Maine and Democrat Byron Dorgan of North Dakota, would allow imports from 25 nations, so long as the drugs are manufactured in FDA-inspected plants.

But the evolving situation in Canada has prompted an outcry from U.S. consumer groups who believe low-income Americans, including senior citizens, could lose access to affordable medication. "Americans are only buying drugs from Canada because President Bush and Congress, with their cozy ties to the pharmaceutical industry, refuse to support a prescription-drug bulk-purchasing plan," David Fink, consumer advocate with the Foundation for Taxpayer and Consumer Rights, said in a statement.

The U.S. bill is opposed by drug makers, President Bush and Sen. Mike Enzi, the chairman of the Senate Health, Education, Labor and Pensions Committee, where the legislation is bogged down. The House has passed similar legislation in the past.

An estimated two million Americans buy prescription drugs directly from Canadian pharmacies. Many U.S. cities and counties also have importation programs that avoid bulk purchases. Minnesota launched a Web site in January 2004 that serves as a price comparison and referral site, and other states have followed suit. Since it opened, the Minnesota site has facilitated nearly 13,000 prescriptions totaling $1.65 million, according to state officials. In a statement, Minnesota Governor Tim Pawlenty said he was "relieved" that yesterday's actions in Canada wouldn't shut down the site.

Canada's exports of prescription drugs to the U.S. totaled $1.1 billion last year, up 10% from 2003, according to IMS Health, a pharmaceutical information and consulting company.
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Write to Tamsin Carlisle at tamsin.carlisle@wsj.com and Christopher Conkey at christopher.conkey@wsj.com


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