Over-the-Border Drug Debate Heats to Boiling

One industry advocate, the Pharmaceutical Research and Manufacturers of America (PhRMA), has attempted to stem the tide through education of the buying public, publishing statements that warn of a lack of regulation on foreign drug products that could make Americans vulnerable to those who would sell them adulterated, counterfeited and unapproved drugs.

The Pharmaceutical Market Access Act of 2003

On August 25, Congress passed the Pharmaceutical Market Access Act of 2003 (H.R. 2427), whose goal is to allow U.S. residents to purchase drugs internationally from FDA-approved labs in 24 designated countries. The text of the bill notes Congress' finding that Americans pay up to 1000% more than consumers in other countries for pharmaceutical products even though the United States is the largest market for such products. Congress projects the savings under the provisions of H.R. 2427 to American consumers to be $635 billion of their own money. In addition to requiring the FDA to approve labs in the 24 countries that will be allowed to import drugs into the United States under the provisions of the bill, it calls for packaging standards using technologies approved by the Bureau of Engraving and Printing that will prevent tampering. The bill has been referred to the Senate Committee on Health, Education, Labor, and Pensions, where it now awaits action.

In response to the passage of H.R. 2427, U.S. pharmaceutical manufacturers increased threats to halt or limit sales of U.S.-made prescription medications to Canadian distributors in order to stop them from selling their products at steep discounts to Americans. For example, a week after Congress' passage of the bill, Pfizer informed Canadian pharmacists that it intended to stop selling drugs to them through wholesalers and distributors, in an effort to better track the movement of their products. In addition, PhRMA has denounced the bill as a band-aid for the problem of lack of insurance coverage for medications and notes on its web site that it will accomplish what price curbs in Europe have: It will lead to a decrease in research and development of new drugs here.

What the FDA Says

The FDA, meanwhile, has always maintained that sale of imported drugs to U.S. residents is illegal, and Congressional passage of the Pharmaceutical Access Act of 2003 has not changed its official stance. On September 16, the agency issued a warning letter to CanaRx, an Internet drug retailer based in Ontario, with offices in Detroit, telling it that its Web site and mail operation that send Canadian drugs to U.S. citizens are illegal, unapproved and potentially dangerous. For example, the FDA contends that CanaRx shipped insulin, which should be kept cool, unrefrigerated, compromising the safety and effectiveness of the drug. The letter offered CanaRx 15 days in which to respond.

'Import Blitz Exams'

The agency also released a statement to the press September 29 titled “FDA/U.S. Customs Import Blitz Exams Reveal Hundreds of Potentially Dangerous Imported Drug Shipments.” The release describes a joint effort undertaken by the FDA and the U.S. Customs Service in which they did spot checks called “blitz exams” of packages suspected of holding pharmaceutical products. These latest blitz exams were carried out in New York and Miami mail facilities from July 29-31, and in San Francisco and Carson, CA, mail facilities from August 5-7. The agencies pulled approximately 100 packages for examination each day from all four facilities, for a total of about 1200 packages examined. In these packages, the joint investigation found some foreign drugs. Of those drugs found, the FDA reported, 88% violated U.S. law “because they contained unapproved drugs.” The specific things the FDA found were these: that drugs approved in and shipped from other countries were in slightly different forms from those the FDA has approved for U.S. consumers; drugs requiring careful dosing to prevent serious risk were being shipped directly to consumers who might then receive no medical supervision in taking them; drug labels gave inadequate information on dosage or were written in languages other than English; drugs were inappropriately packaged for shipment; drugs that had been withdrawn from the U.S. market for safety reasons were being imported by individuals; drugs approved for animals but not humans were being imported for human use; drugs that may have harmful interactions with other pharmaceutical products were being imported by people who might not receive proper advice on potential drug interactions; and consumers were importing controlled substances.

Importation Increasing

The results of this latest blitz were compared with one conducted in 2001, and showed the FDA that importation of drugs is increasing. This, according to the FDA, is not good news, and the agency took the occasion of its findings report to reiterate its opposition to anything that would make the importing of drugs legal. “There is no evidence that unapproved imported drugs are becoming any safer or more reliable,” Commissioner of Food and Drugs Mark B. McClellan stated. “Given FDA's limited resources and authorities to detect and block potentially unsafe imports, we are concerned about any measures that would increase the flow of these unapproved drugs, or provide easier channels for them to enter the United States.”

Consumers Take Action

Americans, to a large extent, just aren't buying the FDA and pharmaceutical industry's arguments. The rank and file is, of course, in favor of saving money, and they see the pharmaceutical industry's efforts as disingenuous. Grassroots lobbying efforts to open up borders and protests against what is seen as pharmaceutical-company greed have mushroomed. For example, following GlaxoSmithKline's move to cut supplies of its pharmaceutical products to Canadian companies that re-sell to Americans, several consumer groups urged their members and others to boycott the company's non-prescription products, such as Tums(R) antacid tablets, Aquafresh(R) toothpaste and Contac(R) cold medicine. As H.R. 2427 was working its way through the House, consumer and lobbying groups like Common Cause urged the public to write and call their congressmen to register their support for the bill.

But individual and consumer group efforts to change the law have gotten an added stamp of legitimacy with the addition of one governmental purchaser of Canadian drugs – the city of Springfield, MA – and three potential government purchasers – including the states of Illinois, Minnesota and Iowa.

The city of Springfield, MA, which is self-insured, has been purchasing drugs shipped from Canada through CanaRx since July for its employees who have signed up for the program. The city began patronizing CanaRx after Springfield's mayor, Michael Albano, discovered the company when buying insulin for his diabetic son. More than 1000 of the city's employees have signed up for the program, and the City of Springfield predicts that if more of its employees sign up for the program, it will save taxpayers between $4 million and $9 million.

Springfield's Mayor Albano met with FDA officials in Washington, DC, on the day the warning letter was sent to CanaRx. Following the meeting, he stated to the press that he remains unconvinced that the city's program was promoting anything wrong. Instead of being swayed by the FDA's stance on the issue, Albano has vowed to continue signing up Springfield's employees and retirees, and says he will let the courts decide the issue, if necessary. In addition, Albano last month called on the City of Springfield to divest itself of all investments in the pharmaceutical industry, which he sees as the equivalent to an oil or drug cartel. The city has only a small percentage of any pharmaceutical company's stock in its portfolio, but Albano has said that he sees divestiture as a moral imperative.

And the State of Illinois, through Gov. Blagojevich, has asked the FDA to reverse its policy prohibiting state and local governments from importing drugs from Canada, asserting that it is the federal government's inability to correct discrepancies between foreign and U.S. drug prices that has created the crisis the state now faces. In a letter sent to Commissioner McClellan, Blagojevich requested a meeting and asked why the FDA prohibits government entities from importing prescription drugs when it permits private health plans like AARP to reimburse plan participants who personally purchase drugs from Canada. He received a written response from McClellan Sept. 23, in which the Commissioner reiterated his concern that foreign-manufactured drugs might be unsafe. Gov. Blagojevich went to Washington, DC on Sept. 24 to lobby for change. He was unable to secure his requested meeting with Commissioner McClellan, but held a press conference to publicize his views. In addition, he met with key lawmakers to discuss legislative negotiations concerning the final language of the Medicare reform bill. At these meetings, he asked congressional members to include a drug re-importation provision similar to that passed by Congress in H.R. 2427. On October 2, Gov. Blagojevich requested that his state's Attorney General Lisa Madigan investigate possible anti-trust violations by major pharmaceutical companies fighting to keep U.S. consumers from obtaining prescription medications in the lower-priced Canadian market. Specifically the governor is asking Madigan to look into whether the pharmaceutical companies are illegally conspiring to limit supplies of their products to Canada, violating state and federal anti-trust laws. In the meantime, the members of Illinois' fact-finding commission went to Canada the week of October 6 to meet with representatives of mail-order and online pharmacies in a number of cities throughout the country. The commission's report is due to be completed by the end of the month.

Will Other States Follow Suit?

Gov. Blagojevich sent letters to the governors of the other 49 states asking them to join him in his fight to gain the right to purchase drugs outside the country. “This is an issue that needs bipartisan support from governors in order for us to at least have the option of exploring the issue, and the ability to potentially pass the savings onto the people of our states,” he wrote. Since that letter went out in mid-September, the governors of two other states, Minnesota and Iowa, have asked their health officials to investigate the possibility of purchasing pharmaceutical products from Canada and other sources, and have asked their attorneys general to look into the legal ramifications and impediments to such action. In addition, several other state governments are reportedly considering options for importing medications to save taxpayer money or paving the way to allow their constituents to legally import drugs on their own.

Other Alternatives

It is clear that the pharmaceutical industry by and large hopes to maintain the status quo within the United States, charging higher prices than in other countries in order to finance research and development as well as generate profits. But the cat is now out of the proverbial bag. Like the music industry going after teenaged copyright infringers sitting in front of their computer screens because it can't stop the flow of free music at a larger source, enforcement of the laws against the import of drugs may require piecemeal prosecution of individuals. That is, unless other countries make it illegal for their own firms to export drugs, which isn't likely to happen, at least not on a universal basis. PhRMA, which endorses much-debated Medicare reforms to help consumers pay for prescription medications, has set up a Web site in cooperation with 48 of its member pharmaceutical companies to try to match needy consumers with programs that will help them obtain lower- or no-cost drugs without their resorting to re-importation. The site, at www.helpingpatients.org, claims that in 2002, PhRMA members provided free medications to 5.5 million U.S. patients.

While the Medicare issue works its way through the legislature, lawmakers are also exploring other means of addressing the problem of increasing unregulated drug imports. For example, Rep. Ginny Brown-Waite (R-FL) has joined 20 other members of the House to call on U.S. Trade Ambassador Robert Zoellick to negotiate trade agreements with several of the world's developed countries that are already regulating drug prices. The goal is to try to bring America's prices into line with those in other countries, spreading the costs of the research, development and marketing of drugs more evenly so that Americans don't bear the entire burden of these costs. But it is going to be difficult to convince the lawmakers of countries in which citizens are already enjoying regulated low-cost drugs to accept more responsibility for the real costs of producing those drugs.

Conclusion

Someone has to pay for the research and development of drugs, as well as for the product liability payouts that consumers see as their rightful due when things go wrong. Consumer, and therefore legislative, opinion is evolving toward favoring price controls, but that may change if the development of new drugs slows due to lack of pharmaceutical company profits. One thing is certain: The Internet and the access it offers to worldwide goods and services has changed the pharmaceutical world, for better or worse.

When Gov. Rod R. Blagojevich of Illinois announced in mid-September that his state was considering buying drugs from Canada for its employees and citizens, the debate over cross-border drug purchases via the Internet and by other means, got even hotter than it was before. The pharmaceutical industry is fighting a battle similar in scope to the music industry's Internet copyright infringement war, but because no suits have been brought against 80-year-old diabetics buying insulin from pharmacies in Montreal, national debate on the issue of the purchase of foreign drugs has gotten less press of late than the debate over music piracy. Still, for the millions of purchasers of pharmaceutical products and the companies that manufacture and sell them, few subjects are quite as contentious or consequential.

Foreign companies are offering consumers in the United States both Internet and mail-order access to pharmaceutical products, which are often cheaper than U.S. drugs because of government subsidies and price controls. Canadian drugs, for example, are on average 67% less expensive than those sold in the United States. Americans can also easily travel over the Canadian and Mexican borders to buy their pharmaceutical supplies in person, even taking bus trips organized specifically for the drug purchaser. And although Canada is not the only country that provides Americans with access to foreign drugs, Canadian drug companies seem to be the biggest threat to American pharmacies and pharmaceutical manufacturers, largely because of their close proximity to the United States and the trust most Americans have in the safety of Canadian products.

Some drug makers, losing the profits that would normally come from the lucrative U.S. market, have attempted to fight back by choking the supply of drugs into the United States, but with limited success. For example, in January, GlaxoSmithKline announced it would stop selling its products to Canadian drug stores that sell to Americans, and AstraZeneca's Canadian arm has begun limiting the quantities of products it will sell to Canadian pharmacies, allowing them to buy only amounts that are in keeping with historical trends.

One industry advocate, the Pharmaceutical Research and Manufacturers of America (PhRMA), has attempted to stem the tide through education of the buying public, publishing statements that warn of a lack of regulation on foreign drug products that could make Americans vulnerable to those who would sell them adulterated, counterfeited and unapproved drugs.

The Pharmaceutical Market Access Act of 2003

On August 25, Congress passed the Pharmaceutical Market Access Act of 2003 (H.R. 2427), whose goal is to allow U.S. residents to purchase drugs internationally from FDA-approved labs in 24 designated countries. The text of the bill notes Congress' finding that Americans pay up to 1000% more than consumers in other countries for pharmaceutical products even though the United States is the largest market for such products. Congress projects the savings under the provisions of H.R. 2427 to American consumers to be $635 billion of their own money. In addition to requiring the FDA to approve labs in the 24 countries that will be allowed to import drugs into the United States under the provisions of the bill, it calls for packaging standards using technologies approved by the Bureau of Engraving and Printing that will prevent tampering. The bill has been referred to the Senate Committee on Health, Education, Labor, and Pensions, where it now awaits action.

In response to the passage of H.R. 2427, U.S. pharmaceutical manufacturers increased threats to halt or limit sales of U.S.-made prescription medications to Canadian distributors in order to stop them from selling their products at steep discounts to Americans. For example, a week after Congress' passage of the bill, Pfizer informed Canadian pharmacists that it intended to stop selling drugs to them through wholesalers and distributors, in an effort to better track the movement of their products. In addition, PhRMA has denounced the bill as a band-aid for the problem of lack of insurance coverage for medications and notes on its web site that it will accomplish what price curbs in Europe have: It will lead to a decrease in research and development of new drugs here.

What the FDA Says

The FDA, meanwhile, has always maintained that sale of imported drugs to U.S. residents is illegal, and Congressional passage of the Pharmaceutical Access Act of 2003 has not changed its official stance. On September 16, the agency issued a warning letter to CanaRx, an Internet drug retailer based in Ontario, with offices in Detroit, telling it that its Web site and mail operation that send Canadian drugs to U.S. citizens are illegal, unapproved and potentially dangerous. For example, the FDA contends that CanaRx shipped insulin, which should be kept cool, unrefrigerated, compromising the safety and effectiveness of the drug. The letter offered CanaRx 15 days in which to respond.

'Import Blitz Exams'

The agency also released a statement to the press September 29 titled “FDA/U.S. Customs Import Blitz Exams Reveal Hundreds of Potentially Dangerous Imported Drug Shipments.” The release describes a joint effort undertaken by the FDA and the U.S. Customs Service in which they did spot checks called “blitz exams” of packages suspected of holding pharmaceutical products. These latest blitz exams were carried out in New York and Miami mail facilities from July 29-31, and in San Francisco and Carson, CA, mail facilities from August 5-7. The agencies pulled approximately 100 packages for examination each day from all four facilities, for a total of about 1200 packages examined. In these packages, the joint investigation found some foreign drugs. Of those drugs found, the FDA reported, 88% violated U.S. law “because they contained unapproved drugs.” The specific things the FDA found were these: that drugs approved in and shipped from other countries were in slightly different forms from those the FDA has approved for U.S. consumers; drugs requiring careful dosing to prevent serious risk were being shipped directly to consumers who might then receive no medical supervision in taking them; drug labels gave inadequate information on dosage or were written in languages other than English; drugs were inappropriately packaged for shipment; drugs that had been withdrawn from the U.S. market for safety reasons were being imported by individuals; drugs approved for animals but not humans were being imported for human use; drugs that may have harmful interactions with other pharmaceutical products were being imported by people who might not receive proper advice on potential drug interactions; and consumers were importing controlled substances.

Importation Increasing

The results of this latest blitz were compared with one conducted in 2001, and showed the FDA that importation of drugs is increasing. This, according to the FDA, is not good news, and the agency took the occasion of its findings report to reiterate its opposition to anything that would make the importing of drugs legal. “There is no evidence that unapproved imported drugs are becoming any safer or more reliable,” Commissioner of Food and Drugs Mark B. McClellan stated. “Given FDA's limited resources and authorities to detect and block potentially unsafe imports, we are concerned about any measures that would increase the flow of these unapproved drugs, or provide easier channels for them to enter the United States.”

Consumers Take Action

Americans, to a large extent, just aren't buying the FDA and pharmaceutical industry's arguments. The rank and file is, of course, in favor of saving money, and they see the pharmaceutical industry's efforts as disingenuous. Grassroots lobbying efforts to open up borders and protests against what is seen as pharmaceutical-company greed have mushroomed. For example, following GlaxoSmithKline's move to cut supplies of its pharmaceutical products to Canadian companies that re-sell to Americans, several consumer groups urged their members and others to boycott the company's non-prescription products, such as Tums(R) antacid tablets, Aquafresh(R) toothpaste and Contac(R) cold medicine. As H.R. 2427 was working its way through the House, consumer and lobbying groups like Common Cause urged the public to write and call their congressmen to register their support for the bill.

But individual and consumer group efforts to change the law have gotten an added stamp of legitimacy with the addition of one governmental purchaser of Canadian drugs – the city of Springfield, MA – and three potential government purchasers – including the states of Illinois, Minnesota and Iowa.

The city of Springfield, MA, which is self-insured, has been purchasing drugs shipped from Canada through CanaRx since July for its employees who have signed up for the program. The city began patronizing CanaRx after Springfield's mayor, Michael Albano, discovered the company when buying insulin for his diabetic son. More than 1000 of the city's employees have signed up for the program, and the City of Springfield predicts that if more of its employees sign up for the program, it will save taxpayers between $4 million and $9 million.

Springfield's Mayor Albano met with FDA officials in Washington, DC, on the day the warning letter was sent to CanaRx. Following the meeting, he stated to the press that he remains unconvinced that the city's program was promoting anything wrong. Instead of being swayed by the FDA's stance on the issue, Albano has vowed to continue signing up Springfield's employees and retirees, and says he will let the courts decide the issue, if necessary. In addition, Albano last month called on the City of Springfield to divest itself of all investments in the pharmaceutical industry, which he sees as the equivalent to an oil or drug cartel. The city has only a small percentage of any pharmaceutical company's stock in its portfolio, but Albano has said that he sees divestiture as a moral imperative.

And the State of Illinois, through Gov. Blagojevich, has asked the FDA to reverse its policy prohibiting state and local governments from importing drugs from Canada, asserting that it is the federal government's inability to correct discrepancies between foreign and U.S. drug prices that has created the crisis the state now faces. In a letter sent to Commissioner McClellan, Blagojevich requested a meeting and asked why the FDA prohibits government entities from importing prescription drugs when it permits private health plans like AARP to reimburse plan participants who personally purchase drugs from Canada. He received a written response from McClellan Sept. 23, in which the Commissioner reiterated his concern that foreign-manufactured drugs might be unsafe. Gov. Blagojevich went to Washington, DC on Sept. 24 to lobby for change. He was unable to secure his requested meeting with Commissioner McClellan, but held a press conference to publicize his views. In addition, he met with key lawmakers to discuss legislative negotiations concerning the final language of the Medicare reform bill. At these meetings, he asked congressional members to include a drug re-importation provision similar to that passed by Congress in H.R. 2427. On October 2, Gov. Blagojevich requested that his state's Attorney General Lisa Madigan investigate possible anti-trust violations by major pharmaceutical companies fighting to keep U.S. consumers from obtaining prescription medications in the lower-priced Canadian market. Specifically the governor is asking Madigan to look into whether the pharmaceutical companies are illegally conspiring to limit supplies of their products to Canada, violating state and federal anti-trust laws. In the meantime, the members of Illinois' fact-finding commission went to Canada the week of October 6 to meet with representatives of mail-order and online pharmacies in a number of cities throughout the country. The commission's report is due to be completed by the end of the month.

Will Other States Follow Suit?

Gov. Blagojevich sent letters to the governors of the other 49 states asking them to join him in his fight to gain the right to purchase drugs outside the country. “This is an issue that needs bipartisan support from governors in order for us to at least have the option of exploring the issue, and the ability to potentially pass the savings onto the people of our states,” he wrote. Since that letter went out in mid-September, the governors of two other states, Minnesota and Iowa, have asked their health officials to investigate the possibility of purchasing pharmaceutical products from Canada and other sources, and have asked their attorneys general to look into the legal ramifications and impediments to such action. In addition, several other state governments are reportedly considering options for importing medications to save taxpayer money or paving the way to allow their constituents to legally import drugs on their own.

Other Alternatives

It is clear that the pharmaceutical industry by and large hopes to maintain the status quo within the United States, charging higher prices than in other countries in order to finance research and development as well as generate profits. But the cat is now out of the proverbial bag. Like the music industry going after teenaged copyright infringers sitting in front of their computer screens because it can't stop the flow of free music at a larger source, enforcement of the laws against the import of drugs may require piecemeal prosecution of individuals. That is, unless other countries make it illegal for their own firms to export drugs, which isn't likely to happen, at least not on a universal basis. PhRMA, which endorses much-debated Medicare reforms to help consumers pay for prescription medications, has set up a Web site in cooperation with 48 of its member pharmaceutical companies to try to match needy consumers with programs that will help them obtain lower- or no-cost drugs without their resorting to re-importation. The site, at www.helpingpatients.org, claims that in 2002, PhRMA members provided free medications to 5.5 million U.S. patients.

While the Medicare issue works its way through the legislature, lawmakers are also exploring other means of addressing the problem of increasing unregulated drug imports. For example, Rep. Ginny Brown-Waite (R-FL) has joined 20 other members of the House to call on U.S. Trade Ambassador Robert Zoellick to negotiate trade agreements with several of the world's developed countries that are already regulating drug prices. The goal is to try to bring America's prices into line with those in other countries, spreading the costs of the research, development and marketing of drugs more evenly so that Americans don't bear the entire burden of these costs. But it is going to be difficult to convince the lawmakers of countries in which citizens are already enjoying regulated low-cost drugs to accept more responsibility for the real costs of producing those drugs.

Conclusion

Someone has to pay for the research and development of drugs, as well as for the product liability payouts that consumers see as their rightful due when things go wrong. Consumer, and therefore legislative, opinion is evolving toward favoring price controls, but that may change if the development of new drugs slows due to lack of pharmaceutical company profits. One thing is certain: The Internet and the access it offers to worldwide goods and services has changed the pharmaceutical world, for better or worse.