Drug Importation Task Force Completes Its Listening Sessions

Gail Shearer, of the group Consumer's Union, told the panel it was “time for a reality check. Reimportation of drugs from Canada by bus trips across the border, by mail order, through the Internet, is `a reality now. These sales are taking place because the U.S. government has failed to develop a model that assures that drugs are affordable to Americans.” Shearer urged the Task Force not focus too hard on the question of Canadian imports alone, due to the small size of the Canadian market and the strains U.S. consumer demand would place on it.

Peter Lurie, of the consumer watchdog group Public Citizen, asserted that drug re-importation would be only a Band-Aid solution to the problem of high U.S. drug prices because the ultimate problem is the prices themselves. But concerning fears of adulterated or counterfeited re-imported drugs as well as domestic drugs, Lurie suggested that drugs' pedigrees should not be as hard to trace as they are today: “If your car turns out to have a nonfunctional airbag and the company is forced to recall that car, [it] will track you down, no matter if your car is a second-hand or third-hand or a fourth-hand car. However, the same thing cannot be done to drugs, and it is extraordinary that we have allowed such a system as that to exist.”

Solutions advanced on that first day of hearings included licensing drug brokers who would serve as quality-control monitors and act as intermediaries between foreign and domestic pharmacists and drug manufacturers, and setting up government-sponsored Web sites that consumers could go to for access to reliable sources of imported pharmaceutical products.

Meeting #2: Drug Distributors and Developers

The second Task Force meeting, held April 5, was for pharmaceutical distributors and drug developers.

Paul Julian of McKesson Supply Solutions, one of the largest pharmaceutical supply companies in the world and the largest pharmaceutical distributor in North America, suggested that large firms like McKesson were the best means through which to distribute drugs safely across international borders. He proposed that under such a system, pharmaceutical distributors with appropriate technology experience and distribution networks on both sides of the border could safely transfer products between their distribution centers in Canada and their distribution centers in the United States. But John Stinson of the Pharmaceutical Distributors Association, an association of small prescription drug wholesalers, noted that although 90% of U.S. pharmaceutical products are distributed by three major wholesalers, the smaller wholesale distributors his association represents do not want to be left out of any new system put in place to re-import drugs.

Larry Kocot, Senior Vice President and General Counsel with the National Association of Chain Drug Stores (NACDS), spoke against drug imports, noting that any such schemes would promote unfair competition by Canadian pharmacies against American pharmacies. Kocot noted that foreign pharmacies do not pay U.S. taxes, are not subject to federal or state consumer protection laws, do not have to comply with stringent federal and state licensure requirements and U.S. safety standards, and do not face as high a threat of lawsuits.

Representatives of several drug manufacturers spoke later in the day, expressing concerns that sales of drugs over the Internet are fostering a boom in drug counterfeiting. For example, D.W. Howell, II, director of Eli Lilly's anti-counterfeiting unit, described a Vietnam-based scheme that was operated partially out of facilities in Los Angeles. There, the perpetrators stripped Lilly product Zyprexa' (a treatment for schizophrenia and bipolar disorder) out of its legitimate packaging, filled the original bottles with iron tablets, and distributed those bottles for consumption outside the U.S. Then they placed the legitimate Zyprexa tablets into counterfeit bottles for consumption in the U.S. marketplace. The counterfeiters mixed multiple strengths of Zyprexa and placed them in the same bottles before sending them out to secondary U.S. distributors. The fear is that legalized Internet imports on a large scale would exacerbate the counterfeiting problem.

Gordon Johnston, Vice President of Regulatory Affairs for the Generic Pharmaceutical Association (GPHA) and the former Deputy Director of the FDA's Office of Generic Drugs, spoke of the importance to his group that the 180-day generic exclusivity incentive not be undermined by imported drugs. GPHA's solution to high prescription drug costs is not foreign imports, but greater use of FDA-approved generic pharmaceuticals, more of which could enter the market if the FDA's Office of Generic Drugs were given more funding to expedite the processing of generic drug applications, Johnston told the panel.

In general, the comments given by the participants during this second meeting went along “party lines,” with drug manufacturers arguing against drug imports and distributors wanting to make sure that, if drug importation is allowed, they get a piece of the distribution pie.

Meeting #3: Public Commentary

At the third meeting, members of the general public were invited to share their views. A diverse group took part, including consumers, doctors, the governor of Wisconsin, representatives of the Pharmaceutical Research and Manufacturing Association and agents of online pharmacy companies, as well as many others.

Drug consumer Rick Roberts, bucking much of the trend among consumers, argued against imports, recounting how, as a victim of AIDS, he had in the past received from his local chain pharmacy adulterated drugs whose pedigrees could not be traced back to the perpetrators. Opening up the borders to drugs from other countries — which the FDA would be even less able to keep track of and police — would be a mistake, Roberts said.

Dr. Rene Rodriquez, president of the Inter-American College of Physicians and Surgeons, a group that works to promote cooperation among U.S. Hispanic physicians, was also against allowing drug imports, positing that the United States would “end up with a two-tier system, where people in the suburbs get safe, FDA medicines, and people in the barrios get medicines of unknown quality and origin.”

Peter Neupert, Chairman of Drugstore.Com, an online pharmaceuticals company, suggested a three-tiered safety mechanism for certifying online drug-selling companies. His suggestions were: 1) to make it illegal for on-line pharmacies to advertise on search engines, unless they meet the approved certification standards, and prohibit search engines from accepting advertisements from on-line pharmacies that are not properly certified; 2) to stop credit card payments to pharmacies that do not meet the certification standards, and stop the funding at the source; and 3) to motivate third-party shippers to refuse shipments from pharmacies that do not meet the certification standards.

Governor Jim Doyle of Wisconsin told the Task Force that his state had had to act, in the absence of federal help, to get its citizens access to cheaper foreign drug sources. To do this, the state launched a Web site in February — www.drugsavings.wi.gov — through which consumers can now order drugs from Canadian pharmacies the state has visited and certified as reliable sources of quality medications. He urged the federal government to make a similar move. “The drug companies have waged an expensive, highly coordinated scare campaign to try to convince people that buying from Canada is unsafe,” Doyle said. However, he asked, “Do any of us really believe that the Canadian health system is more dangerous than our own?” Doyle expressed his constituents' anger over Americans having to “foot the bill” for the research and advertising of drugs that are consumed all over the world, and he asserted that importation from Canada “introduces real competition into the marketplace, and it's going to make the drug companies have to find a better structure of pricing world-wide that will help American consumers.” On questioning by Dr. Mark McClellan concerning additional safeguards that the federal government might put in place (ie, requiring foreign sites to register with the United States and allowing inspections to occur without advance notice), Doyle said he would be willing to look at such possible actions as long as they were not undertaken in order to justify stopping U.S. citizens from going to Canada to get their medications if they so choose. “[L]egislation that conditions those options on shutting off Canada for Wisconsin consumers, I couldn't support,” Doyle said.

Bruce Kuhlik, general counsel of the Pharmaceutical Research and Manufacturing Association (PhRMA), which represents the nation's pharmaceutical and biotechnology companies, made three points on his organization's behalf: 1) that importation is inherently unsafe; 2) that the purported safeguards offered by importation supporters are a totally inadequate substitute for the protections established by Congress and implemented by the FDA; and 3) that there are better solutions already in place to enable more Americans to gain access to affordable pharmaceuticals.

Meeting #4: The Canadian and Academic Points of View

The fourth meeting, held April 27, allowed interested Canadian entities to voice their concerns. Representatives of U.S. universities took part in a later session that day.

Barbara Wells spoke on behalf of the National Association of Pharmacy Regulatory Authorities in Canada, the umbrella voluntary organization of the pharmacy licensing bodies in eight Canadian provinces and two territories. Last November, the association asked the Canadian government to ban the export of drugs to the U.S. until a study on the long-term effects of this trade to Canadian citizens could be carried out. The move toward a ban was prompted by concerns about cross-border jurisdiction when problems arise, about aiding and abetting Americans in their efforts to obtain drugs in contravention of U.S. law, and about keeping drugs in supply for Canadian citizens when they need them.

Ronald Guse from the Manitoba Pharmaceutical Association (Manitoba is one of the hubs of the Canadian online pharmacy industry, which has contributed to a recent economic boom in that province) discussed the safety issues, but said, “I have to admit that I'm here presenting a bit of a schizophrenic position to the task force. Increased importation or the current issue of importation of drugs into the United States from Canada will harm and has harmed the health care system in Canada. However, I have to recognize, as well, [that] there are a certain amount of pressures within our country in certain areas for this commercial activity to continue.” To foster such sales, he suggested that international standards be developed, including standards for licensing wholesalers and pharmacists, and that cross-border sales be limited or temporarily suspended until authorities from the two countries could freely discuss and set up a system for eliminating legal impediments to complaint investigation and prosecution. Guse also asked that a hierarchy of U.S. customers be devised so that only those most in need of cheaper drugs could buy them in Canada, thus ensuring that the availability of pharmaceutical products to Canadian citizens would not be compromised.

University representatives almost universally expressed concerns about the disincentive to development of new drugs if U.S. consumers start importing cheaper medications. In fact, Dr. Patricia Danzon from the University of Pennsylvania, who spoke after several other academics had completed their testimony, said, before launching into her predictions concerning drug importation's disincentives to R&D, “I'm going to sound a bit like a broken record, but I'm going to plow ahead anyway.”

Eric Sheinin, Vice President for Information and Standards Development at the United States Pharmacopoeia, a not-for-profit company that provides public standards for pharmaceutical products being used in the U.S., listed several safety concerns his company has with drug imports, including: 1) Drugs shipped here from other countries might not be bioequivalent to the U.S. reference listed drugs; 2) Without scientific scrutiny, it would be difficult to determine if the public standard in the exporting country was equivalent to the USP standard; 3) Drugs in other countries often go by different names, which could cause confusion; 4) The same dosage forms are not always available in all countries; and 5) Foreign drug-release characteristics may be different from those in the United States.

Dr. Alastair Wood, from Vanderbilt University, offered some novel approaches to the problem. “It's estimated to cost upwards of $800 million to develop a new drug today … In spite of all the scientific advances that we have made recently, the clinical drug development process has changed little, except trials have become ever larger and ever more expensive,” Wood said. He suggested a new staging system for drug approvals that would include rapid approval for surrogate endpoints (and hence smaller, cheaper trials) with patent extensions offered for later studies that demonstrate efficacy, longer patent life for truly novel therapies, and the introduction of market-based financial incentives that reward the most risky and innovative research.

Another suggestion made in this fourth meeting was that because the economic issues of drug importation would have global consequences, a global organization, such as the World Trade Organization, should be involved in the discussions and in coming up with solutions to high U.S. drug prices.

Meeting #5: Health Care Purchasers

Governors and other representatives of several states attended the fifth meeting, as did the CEO of CVS Pharmacies. The governors at the meeting agreed with Task Force questioners that the ultimate solution might lie with getting other developed countries to shoulder more drug development costs so that U.S. prices could fall into line with prices citizens of other countries are paying, but they were not willing to give up on the idea of immediate importation of drugs for their constituents. Such imports, they agreed, would put immediate pressure on drug companies to do something about price disparities, a result that drawn-out trade agreement talks would not accomplish.

Governor Jim Douglas of Vermont offered his state's basic plan for importing pharmaceutical products, which includes the selection of a third-party administrator in Canada to receive prescriptions from Vermonters enrolled in the plan. The third-party administrator would contract with Canadian physicians and accredited pharmacies that would fill the prescriptions and return them to Vermont.

North Dakota's Governor John Hoeven described a Web site on his state's portal that initially provides North Dakota residents with information about generic and therapeutic drug alternatives. If these alternatives do not work for the site's visitor, it then refers them to the North Dakota Prescription Connection, a clearinghouse for the discount programs. Finally, if neither of these options satisfies the consumer, the site refers him/her to Canadian pharmacies that have been examined and determined by the state to provide safe and reliable service.

Governor Tim Pawlenty of Minnesota, a firebrand in the drug importation debate, voiced his opposition to out-and-out price controls, but said, “It is mystifying to me why the U.S. Congress would prohibit itself [from seeking] a bulk purchase discount for Medicare patients … That's just being a smart purchaser in the marketplace, using the leverage of the bulk ability of the Medicare program to go to the drug companies and say 'if you want to participate, we expect X percent discount.'”

The Chairman and President of CVS/Pharmacy, Thomas Ryan, noted that his company's 5000 stores in 36 states dispense about 14% of all the prescriptions in the country, and that CVS is also the largest purchaser of drugs in the United States. His rather surprising testimony was that while many others in his industry oppose importation, he does not. In fact, his position was very close to that of the governors who spoke at the same Task Force meeting: that global changes in drug pricing systems should be worked on, but, in the meantime, imports should be allowed in order to ease the difficulties American buyers have in paying for pharmaceutical products. To accomplish this safely, he suggested that companies like his own take part in a bulk importation plan involving “designated and approved foreign entities, designated and approved licensed wholesalers, and designated and approved U.S. pharmacies. Such a system would give you a clear drug pedigree, a chain of custody, the use of appropriate anti-counterfeiting technologies, and we would charge adequate fees for these exporters to have federal oversight and inspections.”

Meeting #6: Medical Professionals and Pharmacists

Agents of domestic and international pharmacies and representatives of medical practitioners' groups were featured speakers at the sixth and final listening session. They expressed the full range of views, for and against, with respect to legal drug importation.

Susan Winckler of the American Pharmacists Association made the point that her group's members saw hypocrisy in the very discussion of drug imports. “We're talking about importing the drugs when it appears what some people want to do is import the price controls. And if that's what you want to do, please talk about that and have that discussion. I'm not saying that we support price controls, but that would at least seem to be an intellectually honest conversation, rather than this proxy of 'let's import the drugs.'”

Dr. Carole Jennings, speaking on behalf of the American Academy of Nurse Practitioners, discussed how patients' inability to pay for prescription drugs actually increases the cost of medical care and the cost of chronic disease management: “When medications cannot be taken as directed, the risk for increased hospitalization and ER visits multiplies.” Like many of the speakers representing health care providers (notably excluding the American Medical Association's representative), she reported that her organization is not against drug imports, as long as appropriate safeguards could be put into place.

On the issue of safety, Carmen Catizone, of the National Association of Boards of Pharmacy (NABP), criticized the premise that people must die before laws against illegal drug imports are enforced. Catizone charged, “the 'show us the body strategy' proposed by some legislators, governors, mayors and other public officials is irresponsible.” Dr. Marv Shepherd, representing the Academy of Managed Care Pharmacy, wanted to alert the Task Force to the fact that prescriptions aren't actually needed to order drugs off the Internet. “So you get your oxycodone or any other narcotic or drug you want without going to the doctor, and that's the number-one reason why [consumers] go to Mexico: access,” said Shepherd. And, Douglas Scheckelhoff of the American Society of Health-System Pharmacists brought up an often overlooked safety factor for the Task Force to consider: that a relaxation of the prohibitions against drug imports could leave U.S. citizens vulnerable to terrorists, who might easily send adulterated drugs into the U.S. marketplace.

In his testimony, Nathan Jacobson, President & CEO of MagenDavid Meds.com, an Israeli Internet pharmacy, compared the Internet with the Gutenberg press of old, which exponentially increased literacy and general learning, making a pivotal contribution to social and economic development in Europe. Nevertheless, he said, the Gutenberg press was reviled by the vested interests in society that previously exercised a monopoly on information and used that monopoly to maintain political, social, and economic control. Likewise, the reaction of vested interests in the pharmaceutical world was predictable, he said, but would not stop the changes the Internet will force on the industry.

The Sessions End

Dr. Carmona noted following the final meeting that a total of 101 presenters had spoken at the six listening sessions, expressing myriad views and offering the Task Force members much valuable information. The group's members are required to report their findings and recommendations by the end of the year, but their goal is to make their report to HHS Secretary Thompson even sooner, if possible. At the end of his closing comments after that final session, Dr. Carmona thanked the members of the Task Force for their service, then — alluding to the Herculean task the members have before them in sifting through the collected information and formulating their recommendations – added, “[R]est assured there will be more service to come.”

(see box below)

The Task Force's Members

Health and Human Services Secretary Tommy G. Thompson named 13 people to serve on the Task Force on Drug Importation. Those members are:

Richard H. Carmona — U.S. Surgeon General and task force chairman.

Dr. Mark McClellan — Commissioner, Centers for Medicare and Medicaid Services.

Alex Azar — General Counsel for the Department of Health and Human Serivces.

Dr. Elizabeth Duke — Administrator for Health Resources and Services Administration.

Tom Reilly — Public Health Branch Chief with the Office of Management and Budget.

Amit Sachdev — Acting FDA Deputy Commissioner for Policy.

Colette Winston — a trial attorney at the Department of Justice (replaced by attorney Tracy Hardin, also of the DOJ, when Winston left to accept a judgeship.)

Mike O'Grady — Assistant Secretary for Planning and Evaluation, Department of Health and Human Services.

Jason Ahern — Assistant Commissioner, Office of Field Operations, U.S. Customs and Border Enforcement, Department of Homeland Security.

Elizabeth Willis – -Chief of Drug Operations Section, Office of Diversion Control, U.S. Drug Enforcement Administration.

Josefina Carbonell – -Assistant Secretary for Aging, Department of Health and Human Services.

William Raub — Deputy Assistant Secretary of Health for Public Health, Emergency Preparedness.

Dr. Les Crawford — Deputy Commissioner of the FDA.

Over the past few months, the Task Force on Drug Importation has held its so-called “listening sessions” with groups and individuals that would be impacted by drug importation, should it be legalized. At the meetings, U.S. Surgeon General Richard H. Carmona served as the chairman over a panel of representatives from the Department of Health and Human Services, as well as from other departments of the federal government with an interest in drug importation issues (see sidebar on page 5). The task force's members are being asked to offer recommendations to Health and Human Services' Secretary Tommy Thompson by December 2004 concerning how best to address key questions posed by Congress as part of the Medicare Prescription Drug Act, such as how drugs can safely be imported, what the impact of such imports would be on incentives to drug research and development, and how much the policing of imports would cost the government.

Meeting #1: Consumer Groups

The initial meeting took place on March 19, and featured speakers from several invited consumer groups.

Gail Shearer, of the group Consumer's Union, told the panel it was “time for a reality check. Reimportation of drugs from Canada by bus trips across the border, by mail order, through the Internet, is `a reality now. These sales are taking place because the U.S. government has failed to develop a model that assures that drugs are affordable to Americans.” Shearer urged the Task Force not focus too hard on the question of Canadian imports alone, due to the small size of the Canadian market and the strains U.S. consumer demand would place on it.

Peter Lurie, of the consumer watchdog group Public Citizen, asserted that drug re-importation would be only a Band-Aid solution to the problem of high U.S. drug prices because the ultimate problem is the prices themselves. But concerning fears of adulterated or counterfeited re-imported drugs as well as domestic drugs, Lurie suggested that drugs' pedigrees should not be as hard to trace as they are today: “If your car turns out to have a nonfunctional airbag and the company is forced to recall that car, [it] will track you down, no matter if your car is a second-hand or third-hand or a fourth-hand car. However, the same thing cannot be done to drugs, and it is extraordinary that we have allowed such a system as that to exist.”

Solutions advanced on that first day of hearings included licensing drug brokers who would serve as quality-control monitors and act as intermediaries between foreign and domestic pharmacists and drug manufacturers, and setting up government-sponsored Web sites that consumers could go to for access to reliable sources of imported pharmaceutical products.

Meeting #2: Drug Distributors and Developers

The second Task Force meeting, held April 5, was for pharmaceutical distributors and drug developers.

Paul Julian of McKesson Supply Solutions, one of the largest pharmaceutical supply companies in the world and the largest pharmaceutical distributor in North America, suggested that large firms like McKesson were the best means through which to distribute drugs safely across international borders. He proposed that under such a system, pharmaceutical distributors with appropriate technology experience and distribution networks on both sides of the border could safely transfer products between their distribution centers in Canada and their distribution centers in the United States. But John Stinson of the Pharmaceutical Distributors Association, an association of small prescription drug wholesalers, noted that although 90% of U.S. pharmaceutical products are distributed by three major wholesalers, the smaller wholesale distributors his association represents do not want to be left out of any new system put in place to re-import drugs.

Larry Kocot, Senior Vice President and General Counsel with the National Association of Chain Drug Stores (NACDS), spoke against drug imports, noting that any such schemes would promote unfair competition by Canadian pharmacies against American pharmacies. Kocot noted that foreign pharmacies do not pay U.S. taxes, are not subject to federal or state consumer protection laws, do not have to comply with stringent federal and state licensure requirements and U.S. safety standards, and do not face as high a threat of lawsuits.

Representatives of several drug manufacturers spoke later in the day, expressing concerns that sales of drugs over the Internet are fostering a boom in drug counterfeiting. For example, D.W. Howell, II, director of Eli Lilly's anti-counterfeiting unit, described a Vietnam-based scheme that was operated partially out of facilities in Los Angeles. There, the perpetrators stripped Lilly product Zyprexa' (a treatment for schizophrenia and bipolar disorder) out of its legitimate packaging, filled the original bottles with iron tablets, and distributed those bottles for consumption outside the U.S. Then they placed the legitimate Zyprexa tablets into counterfeit bottles for consumption in the U.S. marketplace. The counterfeiters mixed multiple strengths of Zyprexa and placed them in the same bottles before sending them out to secondary U.S. distributors. The fear is that legalized Internet imports on a large scale would exacerbate the counterfeiting problem.

Gordon Johnston, Vice President of Regulatory Affairs for the Generic Pharmaceutical Association (GPHA) and the former Deputy Director of the FDA's Office of Generic Drugs, spoke of the importance to his group that the 180-day generic exclusivity incentive not be undermined by imported drugs. GPHA's solution to high prescription drug costs is not foreign imports, but greater use of FDA-approved generic pharmaceuticals, more of which could enter the market if the FDA's Office of Generic Drugs were given more funding to expedite the processing of generic drug applications, Johnston told the panel.

In general, the comments given by the participants during this second meeting went along “party lines,” with drug manufacturers arguing against drug imports and distributors wanting to make sure that, if drug importation is allowed, they get a piece of the distribution pie.

Meeting #3: Public Commentary

At the third meeting, members of the general public were invited to share their views. A diverse group took part, including consumers, doctors, the governor of Wisconsin, representatives of the Pharmaceutical Research and Manufacturing Association and agents of online pharmacy companies, as well as many others.

Drug consumer Rick Roberts, bucking much of the trend among consumers, argued against imports, recounting how, as a victim of AIDS, he had in the past received from his local chain pharmacy adulterated drugs whose pedigrees could not be traced back to the perpetrators. Opening up the borders to drugs from other countries — which the FDA would be even less able to keep track of and police — would be a mistake, Roberts said.

Dr. Rene Rodriquez, president of the Inter-American College of Physicians and Surgeons, a group that works to promote cooperation among U.S. Hispanic physicians, was also against allowing drug imports, positing that the United States would “end up with a two-tier system, where people in the suburbs get safe, FDA medicines, and people in the barrios get medicines of unknown quality and origin.”

Peter Neupert, Chairman of Drugstore.Com, an online pharmaceuticals company, suggested a three-tiered safety mechanism for certifying online drug-selling companies. His suggestions were: 1) to make it illegal for on-line pharmacies to advertise on search engines, unless they meet the approved certification standards, and prohibit search engines from accepting advertisements from on-line pharmacies that are not properly certified; 2) to stop credit card payments to pharmacies that do not meet the certification standards, and stop the funding at the source; and 3) to motivate third-party shippers to refuse shipments from pharmacies that do not meet the certification standards.

Governor Jim Doyle of Wisconsin told the Task Force that his state had had to act, in the absence of federal help, to get its citizens access to cheaper foreign drug sources. To do this, the state launched a Web site in February — www.drugsavings.wi.gov — through which consumers can now order drugs from Canadian pharmacies the state has visited and certified as reliable sources of quality medications. He urged the federal government to make a similar move. “The drug companies have waged an expensive, highly coordinated scare campaign to try to convince people that buying from Canada is unsafe,” Doyle said. However, he asked, “Do any of us really believe that the Canadian health system is more dangerous than our own?” Doyle expressed his constituents' anger over Americans having to “foot the bill” for the research and advertising of drugs that are consumed all over the world, and he asserted that importation from Canada “introduces real competition into the marketplace, and it's going to make the drug companies have to find a better structure of pricing world-wide that will help American consumers.” On questioning by Dr. Mark McClellan concerning additional safeguards that the federal government might put in place (ie, requiring foreign sites to register with the United States and allowing inspections to occur without advance notice), Doyle said he would be willing to look at such possible actions as long as they were not undertaken in order to justify stopping U.S. citizens from going to Canada to get their medications if they so choose. “[L]egislation that conditions those options on shutting off Canada for Wisconsin consumers, I couldn't support,” Doyle said.

Bruce Kuhlik, general counsel of the Pharmaceutical Research and Manufacturing Association (PhRMA), which represents the nation's pharmaceutical and biotechnology companies, made three points on his organization's behalf: 1) that importation is inherently unsafe; 2) that the purported safeguards offered by importation supporters are a totally inadequate substitute for the protections established by Congress and implemented by the FDA; and 3) that there are better solutions already in place to enable more Americans to gain access to affordable pharmaceuticals.

Meeting #4: The Canadian and Academic Points of View

The fourth meeting, held April 27, allowed interested Canadian entities to voice their concerns. Representatives of U.S. universities took part in a later session that day.

Barbara Wells spoke on behalf of the National Association of Pharmacy Regulatory Authorities in Canada, the umbrella voluntary organization of the pharmacy licensing bodies in eight Canadian provinces and two territories. Last November, the association asked the Canadian government to ban the export of drugs to the U.S. until a study on the long-term effects of this trade to Canadian citizens could be carried out. The move toward a ban was prompted by concerns about cross-border jurisdiction when problems arise, about aiding and abetting Americans in their efforts to obtain drugs in contravention of U.S. law, and about keeping drugs in supply for Canadian citizens when they need them.

Ronald Guse from the Manitoba Pharmaceutical Association (Manitoba is one of the hubs of the Canadian online pharmacy industry, which has contributed to a recent economic boom in that province) discussed the safety issues, but said, “I have to admit that I'm here presenting a bit of a schizophrenic position to the task force. Increased importation or the current issue of importation of drugs into the United States from Canada will harm and has harmed the health care system in Canada. However, I have to recognize, as well, [that] there are a certain amount of pressures within our country in certain areas for this commercial activity to continue.” To foster such sales, he suggested that international standards be developed, including standards for licensing wholesalers and pharmacists, and that cross-border sales be limited or temporarily suspended until authorities from the two countries could freely discuss and set up a system for eliminating legal impediments to complaint investigation and prosecution. Guse also asked that a hierarchy of U.S. customers be devised so that only those most in need of cheaper drugs could buy them in Canada, thus ensuring that the availability of pharmaceutical products to Canadian citizens would not be compromised.

University representatives almost universally expressed concerns about the disincentive to development of new drugs if U.S. consumers start importing cheaper medications. In fact, Dr. Patricia Danzon from the University of Pennsylvania, who spoke after several other academics had completed their testimony, said, before launching into her predictions concerning drug importation's disincentives to R&D, “I'm going to sound a bit like a broken record, but I'm going to plow ahead anyway.”

Eric Sheinin, Vice President for Information and Standards Development at the United States Pharmacopoeia, a not-for-profit company that provides public standards for pharmaceutical products being used in the U.S., listed several safety concerns his company has with drug imports, including: 1) Drugs shipped here from other countries might not be bioequivalent to the U.S. reference listed drugs; 2) Without scientific scrutiny, it would be difficult to determine if the public standard in the exporting country was equivalent to the USP standard; 3) Drugs in other countries often go by different names, which could cause confusion; 4) The same dosage forms are not always available in all countries; and 5) Foreign drug-release characteristics may be different from those in the United States.

Dr. Alastair Wood, from Vanderbilt University, offered some novel approaches to the problem. “It's estimated to cost upwards of $800 million to develop a new drug today … In spite of all the scientific advances that we have made recently, the clinical drug development process has changed little, except trials have become ever larger and ever more expensive,” Wood said. He suggested a new staging system for drug approvals that would include rapid approval for surrogate endpoints (and hence smaller, cheaper trials) with patent extensions offered for later studies that demonstrate efficacy, longer patent life for truly novel therapies, and the introduction of market-based financial incentives that reward the most risky and innovative research.

Another suggestion made in this fourth meeting was that because the economic issues of drug importation would have global consequences, a global organization, such as the World Trade Organization, should be involved in the discussions and in coming up with solutions to high U.S. drug prices.

Meeting #5: Health Care Purchasers

Governors and other representatives of several states attended the fifth meeting, as did the CEO of CVS Pharmacies. The governors at the meeting agreed with Task Force questioners that the ultimate solution might lie with getting other developed countries to shoulder more drug development costs so that U.S. prices could fall into line with prices citizens of other countries are paying, but they were not willing to give up on the idea of immediate importation of drugs for their constituents. Such imports, they agreed, would put immediate pressure on drug companies to do something about price disparities, a result that drawn-out trade agreement talks would not accomplish.

Governor Jim Douglas of Vermont offered his state's basic plan for importing pharmaceutical products, which includes the selection of a third-party administrator in Canada to receive prescriptions from Vermonters enrolled in the plan. The third-party administrator would contract with Canadian physicians and accredited pharmacies that would fill the prescriptions and return them to Vermont.

North Dakota's Governor John Hoeven described a Web site on his state's portal that initially provides North Dakota residents with information about generic and therapeutic drug alternatives. If these alternatives do not work for the site's visitor, it then refers them to the North Dakota Prescription Connection, a clearinghouse for the discount programs. Finally, if neither of these options satisfies the consumer, the site refers him/her to Canadian pharmacies that have been examined and determined by the state to provide safe and reliable service.

Governor Tim Pawlenty of Minnesota, a firebrand in the drug importation debate, voiced his opposition to out-and-out price controls, but said, “It is mystifying to me why the U.S. Congress would prohibit itself [from seeking] a bulk purchase discount for Medicare patients … That's just being a smart purchaser in the marketplace, using the leverage of the bulk ability of the Medicare program to go to the drug companies and say 'if you want to participate, we expect X percent discount.'”

The Chairman and President of CVS/Pharmacy, Thomas Ryan, noted that his company's 5000 stores in 36 states dispense about 14% of all the prescriptions in the country, and that CVS is also the largest purchaser of drugs in the United States. His rather surprising testimony was that while many others in his industry oppose importation, he does not. In fact, his position was very close to that of the governors who spoke at the same Task Force meeting: that global changes in drug pricing systems should be worked on, but, in the meantime, imports should be allowed in order to ease the difficulties American buyers have in paying for pharmaceutical products. To accomplish this safely, he suggested that companies like his own take part in a bulk importation plan involving “designated and approved foreign entities, designated and approved licensed wholesalers, and designated and approved U.S. pharmacies. Such a system would give you a clear drug pedigree, a chain of custody, the use of appropriate anti-counterfeiting technologies, and we would charge adequate fees for these exporters to have federal oversight and inspections.”

Meeting #6: Medical Professionals and Pharmacists

Agents of domestic and international pharmacies and representatives of medical practitioners' groups were featured speakers at the sixth and final listening session. They expressed the full range of views, for and against, with respect to legal drug importation.

Susan Winckler of the American Pharmacists Association made the point that her group's members saw hypocrisy in the very discussion of drug imports. “We're talking about importing the drugs when it appears what some people want to do is import the price controls. And if that's what you want to do, please talk about that and have that discussion. I'm not saying that we support price controls, but that would at least seem to be an intellectually honest conversation, rather than this proxy of 'let's import the drugs.'”

Dr. Carole Jennings, speaking on behalf of the American Academy of Nurse Practitioners, discussed how patients' inability to pay for prescription drugs actually increases the cost of medical care and the cost of chronic disease management: “When medications cannot be taken as directed, the risk for increased hospitalization and ER visits multiplies.” Like many of the speakers representing health care providers (notably excluding the American Medical Association's representative), she reported that her organization is not against drug imports, as long as appropriate safeguards could be put into place.

On the issue of safety, Carmen Catizone, of the National Association of Boards of Pharmacy (NABP), criticized the premise that people must die before laws against illegal drug imports are enforced. Catizone charged, “the 'show us the body strategy' proposed by some legislators, governors, mayors and other public officials is irresponsible.” Dr. Marv Shepherd, representing the Academy of Managed Care Pharmacy, wanted to alert the Task Force to the fact that prescriptions aren't actually needed to order drugs off the Internet. “So you get your oxycodone or any other narcotic or drug you want without going to the doctor, and that's the number-one reason why [consumers] go to Mexico: access,” said Shepherd. And, Douglas Scheckelhoff of the American Society of Health-System Pharmacists brought up an often overlooked safety factor for the Task Force to consider: that a relaxation of the prohibitions against drug imports could leave U.S. citizens vulnerable to terrorists, who might easily send adulterated drugs into the U.S. marketplace.

In his testimony, Nathan Jacobson, President & CEO of MagenDavid Meds.com, an Israeli Internet pharmacy, compared the Internet with the Gutenberg press of old, which exponentially increased literacy and general learning, making a pivotal contribution to social and economic development in Europe. Nevertheless, he said, the Gutenberg press was reviled by the vested interests in society that previously exercised a monopoly on information and used that monopoly to maintain political, social, and economic control. Likewise, the reaction of vested interests in the pharmaceutical world was predictable, he said, but would not stop the changes the Internet will force on the industry.

The Sessions End

Dr. Carmona noted following the final meeting that a total of 101 presenters had spoken at the six listening sessions, expressing myriad views and offering the Task Force members much valuable information. The group's members are required to report their findings and recommendations by the end of the year, but their goal is to make their report to HHS Secretary Thompson even sooner, if possible. At the end of his closing comments after that final session, Dr. Carmona thanked the members of the Task Force for their service, then — alluding to the Herculean task the members have before them in sifting through the collected information and formulating their recommendations – added, “[R]est assured there will be more service to come.”

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The Task Force's Members

Health and Human Services Secretary Tommy G. Thompson named 13 people to serve on the Task Force on Drug Importation. Those members are:

Richard H. Carmona — U.S. Surgeon General and task force chairman.

Dr. Mark McClellan — Commissioner, Centers for Medicare and Medicaid Services.

Alex Azar — General Counsel for the Department of Health and Human Serivces.

Dr. Elizabeth Duke — Administrator for Health Resources and Services Administration.

Tom Reilly — Public Health Branch Chief with the Office of Management and Budget.

Amit Sachdev — Acting FDA Deputy Commissioner for Policy.

Colette Winston — a trial attorney at the Department of Justice (replaced by attorney Tracy Hardin, also of the DOJ, when Winston left to accept a judgeship.)

Mike O'Grady — Assistant Secretary for Planning and Evaluation, Department of Health and Human Services.

Jason Ahern — Assistant Commissioner, Office of Field Operations, U.S. Customs and Border Enforcement, Department of Homeland Security.

Elizabeth Willis – -Chief of Drug Operations Section, Office of Diversion Control, U.S. Drug Enforcement Administration.

Josefina Carbonell – -Assistant Secretary for Aging, Department of Health and Human Services.

William Raub — Deputy Assistant Secretary of Health for Public Health, Emergency Preparedness.

Dr. Les Crawford — Deputy Commissioner of the FDA.