Should We All Move to Canada?

The advent of the Internet has multiplied cross-border drug sale commerce exponentially, making pharmaceutical manufacturers, the Food and Drug Administration (FDA) and others very nervous. What started as a trickle of Internet-savvy drug purchasers accessing low-priced pharmaceuticals in other countries has turned into a national movement involving individuals and local and state governments defying the federal government's ban on imported drugs.

Federal Government Commissions a Study

With passage of the Medicate Prescription Drug, Improvement and Modernization Act of 2003 (MMA), Congress directed the Department of Health and Human Services (HHS) to lead a comprehensive study gauging both the positive and negative effects that could be expected on the health of American patients, on medical costs and on the development of new medicines if pharmaceutical products were allowed legally to be imported into the United States from countries with lower drug prices. In February 2004, HHS created a task force charged with advising and assisting it in this task. Former FDA Commissioner Mark McClellan was chosen to lead the team, sparking immediate controversy, given McClellan's unapologetic historic disdain for the concept that drugs could be imported safely for use by American consumers.

Throughout 2004, the Task Force on Drug Importation held six “listening sessions” at which groups and individuals that would be impacted by drug importation were invited to speak.

The initial meeting, in March 2004, 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 to focus too intently 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. 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.

At subsequent meetings, pharmaceutical distributors, drug developers, manufacturers, doctors, nurses, government representatives and consumers spoke. Larry Kocot, Senior Vice President and General Counsel with the National Association of Chain Drug Stores (NACDS), testified 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 about their concerns that sales of drugs over the Internet are fostering a boom in drug counterfeiting. 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 CVS 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.

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 through which consumers could order drugs from Canadian pharmacies that the state had 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?” 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) Importation is inherently unsafe; 2) 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) There are better solutions already in place to enable more Americans to gain access to affordable pharmaceuticals (such as low-cost drug programs run by pharmaceutical companies).

University representatives almost universally expressed concerns about the disincentive to development of new drugs if U.S. consumers start importing cheaper medications. 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.'”

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 was not against drug imports, as long as appropriate safeguards could be put into place.

When the Task Force's report came out in December, it held no surprises, instead following the federal government line that drug importation cannot be accomplished safely. It also warned that drug development would suffer if pharmaceutical companies had a lesser expectation of reaping high profits from new drugs. Although the Task Force did say that it might be feasible to set up a program to import drugs from Canada, it claimed that the costs of any such program would largely eliminate any cost savings to the public. Critics of the report noted that most of the Task Force's members were Bush Administration appointees who were never likely to swerve far from the Republican posture.

The FDA's Stance Today

In 2003, the State of Illinois became the first state government to announce its intention to purchase foreign drugs for its employees and citizens. Illinois Governor Rod. R. Blagojevich wrangled with the FDA for months over the state's proposed plan, but the FDA never budged; as far as it was concerned, any program that helped Americans purchase pharmaceutical products over the Internet or by mail order from foreign countries was illegal.

Despite this, Illinois, along with Kansas, Missouri and Wisconsin, launched its drug purchasing programs in October 2004. Other states and local municipalities set up similar programs. To date, the FDA has done nothing concrete to shut these programs down. It makes noises implying that those who defy the law may be held liable, but noise is all there is, thus far. For example, on Jan. 28 of this year, in response to the recently enacted law authorizing the Rhode Island Department of Health to license Canadian pharmacies to import prescription medications into the state of Rhode Island, William K. Hubbard, Associate Commissioner for Policy and Planning at the Food and Drug Administration, sent a letter to the Governor of Rhode Island, Patrick C. Lynch. The letter's main point was summed up by Hubbard when he stated, “[The] FDA is very concerned about the safety risks associated with the importation of prescription drugs from foreign countries. In our experience, many drugs obtained from foreign sources that purport and appear to be the same as U.S. approved prescription drugs have been of unknown origin and quality. We cannot provide adequate assurance to the American public that the drug products delivered to consumers in the United States from foreign countries are the same products approved by [the] FDA.” Basically, the FDA contends that its rules federally pre-empt any open-border drug marketing laws the states have or may enact.

The FDA has not yet shown its teeth when it comes to individuals who violate the law, but the threat of prosecution is there. As Hubbard, on behalf of the FDA, warned Rhode Island's governor, there are several sources of civil and criminal liability for those who violate provisions of the FFDCA. One such provision, FFDCA 21 U.S.C. ' 331, states that a person may be found civilly and criminally liable if they cause a prohibited act under the FFDCA. Would a doctor's recommendation to a patient to buy imported drugs fall under ' 331? It probably would not. But if a medical practitioner actually helped facilitate the purchase in some way, that answer might change.

To date, the FDA has focused its enforcement resources on those who commercialize the practice of importing drugs into the United States from abroad, and generally has not chosen to seize drugs imported by individuals who make trips across the border to buy them for their own personal use. For instance, on Dec. 1, 2004, The U.S. Attorney's Office, Southern District of New York, on behalf of the FDA, filed a civil complaint against Canada Care Drugs Inc. for the illegal importation of prescription drugs into the U.S. Canada Care was previously affiliated with Rx Depot Inc., a company that was engaged in the illegal importation of prescription drugs until November 2003, when the U.S. District Court for the Northern District of Oklahoma entered an order of preliminary injunction against the company and its affiliates to stop their cross-border drug sales activity. According to the complaint filed in the Southern District of New York, following the preliminary injunction order against Rx Depot and its affiliates, which was made permanent with the entering of a consent decree in August 2004, Canada Care severed its relationship with Rx Depot, but continued illegal activity in violation of the FDCA. The alleged violations include shipping unapproved drugs in place of prescribed medications and shipping in a way that could compromise the safety of the medications shipped.

Despite the FDA's current focus, the agency retains the authority to bring an enforcement action in any case in which a provision of the FFDCA has been violated. Still, considering the fact that open and notorious state-sponsored facilitation of cross-border prescription medication purchases has not brought a federal crackdown, individual medical practitioners who do the same are not likely to become targets at this time.

The high cost of prescription medications in the United States has been troubling health care providers and their patients for years. Physicians worry that it will do no good to prescribe a medication to someone who won't be able to afford to buy it, and patients who try to save money by taking less than the prescribed dose worry that that they're putting their health in danger. Any failed medical treatment that harms a patient is fertile ground for a lawsuit against the physician, even if he or she is not the one to blame. Should medical practitioners suggest imported drugs to their patients who might otherwise not be able to afford their prescribed medications?

The U.S. Drug Sales Story

Many other developed countries have put strict limitations on the drug prices that can be charged to their citizens. The United States, however, has shied away from setting drug prices, a situation that leaves American consumers in the unenviable position of having to foot a disproportionate share of the worldwide bill for drug development, manufacturing and advertising. Because of the disparity between the prices of pharmaceutical products inside and outside the United States, Americans living in border states have for years been crossing the frontier into Canada (and to a lesser extent, into Mexico and other countries) to purchase their medications at discounted prices. This demand even led to the growth of a tour bus service sub-business specializing in bus tours to Canada for the sole purpose of transporting consumers across the border to get their medications at low prices. Although such practices might technically be considered illegal, Americans have generally been allowed to bring medications for their own use home with them from foreign countries. However, drugs imported for personal use into the United States from Canada over the Internet and through mail-order almost universally violate the Federal Food Drug and Cosmetics Act (FFDCA) because they are unapproved (21 U.S.C. ' 355), are labeled incorrectly (21 U.S.C. ” 352, 353), or are dispensed without a valid prescription (21 U.S.C. ' 353(b)(1)). Importing a drug into the United States that is unapproved and/or does not comply with the labeling requirements in the FFDCA is prohibited under 21 U.S.C. ” 331(a), and/or (d).

The advent of the Internet has multiplied cross-border drug sale commerce exponentially, making pharmaceutical manufacturers, the Food and Drug Administration (FDA) and others very nervous. What started as a trickle of Internet-savvy drug purchasers accessing low-priced pharmaceuticals in other countries has turned into a national movement involving individuals and local and state governments defying the federal government's ban on imported drugs.

Federal Government Commissions a Study

With passage of the Medicate Prescription Drug, Improvement and Modernization Act of 2003 (MMA), Congress directed the Department of Health and Human Services (HHS) to lead a comprehensive study gauging both the positive and negative effects that could be expected on the health of American patients, on medical costs and on the development of new medicines if pharmaceutical products were allowed legally to be imported into the United States from countries with lower drug prices. In February 2004, HHS created a task force charged with advising and assisting it in this task. Former FDA Commissioner Mark McClellan was chosen to lead the team, sparking immediate controversy, given McClellan's unapologetic historic disdain for the concept that drugs could be imported safely for use by American consumers.

Throughout 2004, the Task Force on Drug Importation held six “listening sessions” at which groups and individuals that would be impacted by drug importation were invited to speak.

The initial meeting, in March 2004, 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 to focus too intently 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. 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.

At subsequent meetings, pharmaceutical distributors, drug developers, manufacturers, doctors, nurses, government representatives and consumers spoke. Larry Kocot, Senior Vice President and General Counsel with the National Association of Chain Drug Stores (NACDS), testified 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 about their concerns that sales of drugs over the Internet are fostering a boom in drug counterfeiting. 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 CVS 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.

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 through which consumers could order drugs from Canadian pharmacies that the state had 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?” 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) Importation is inherently unsafe; 2) 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) There are better solutions already in place to enable more Americans to gain access to affordable pharmaceuticals (such as low-cost drug programs run by pharmaceutical companies).

University representatives almost universally expressed concerns about the disincentive to development of new drugs if U.S. consumers start importing cheaper medications. 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.'”

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 was not against drug imports, as long as appropriate safeguards could be put into place.

When the Task Force's report came out in December, it held no surprises, instead following the federal government line that drug importation cannot be accomplished safely. It also warned that drug development would suffer if pharmaceutical companies had a lesser expectation of reaping high profits from new drugs. Although the Task Force did say that it might be feasible to set up a program to import drugs from Canada, it claimed that the costs of any such program would largely eliminate any cost savings to the public. Critics of the report noted that most of the Task Force's members were Bush Administration appointees who were never likely to swerve far from the Republican posture.

The FDA's Stance Today

In 2003, the State of Illinois became the first state government to announce its intention to purchase foreign drugs for its employees and citizens. Illinois Governor Rod. R. Blagojevich wrangled with the FDA for months over the state's proposed plan, but the FDA never budged; as far as it was concerned, any program that helped Americans purchase pharmaceutical products over the Internet or by mail order from foreign countries was illegal.

Despite this, Illinois, along with Kansas, Missouri and Wisconsin, launched its drug purchasing programs in October 2004. Other states and local municipalities set up similar programs. To date, the FDA has done nothing concrete to shut these programs down. It makes noises implying that those who defy the law may be held liable, but noise is all there is, thus far. For example, on Jan. 28 of this year, in response to the recently enacted law authorizing the Rhode Island Department of Health to license Canadian pharmacies to import prescription medications into the state of Rhode Island, William K. Hubbard, Associate Commissioner for Policy and Planning at the Food and Drug Administration, sent a letter to the Governor of Rhode Island, Patrick C. Lynch. The letter's main point was summed up by Hubbard when he stated, “[The] FDA is very concerned about the safety risks associated with the importation of prescription drugs from foreign countries. In our experience, many drugs obtained from foreign sources that purport and appear to be the same as U.S. approved prescription drugs have been of unknown origin and quality. We cannot provide adequate assurance to the American public that the drug products delivered to consumers in the United States from foreign countries are the same products approved by [the] FDA.” Basically, the FDA contends that its rules federally pre-empt any open-border drug marketing laws the states have or may enact.

The FDA has not yet shown its teeth when it comes to individuals who violate the law, but the threat of prosecution is there. As Hubbard, on behalf of the FDA, warned Rhode Island's governor, there are several sources of civil and criminal liability for those who violate provisions of the FFDCA. One such provision, FFDCA 21 U.S.C. ' 331, states that a person may be found civilly and criminally liable if they cause a prohibited act under the FFDCA. Would a doctor's recommendation to a patient to buy imported drugs fall under ' 331? It probably would not. But if a medical practitioner actually helped facilitate the purchase in some way, that answer might change.

To date, the FDA has focused its enforcement resources on those who commercialize the practice of importing drugs into the United States from abroad, and generally has not chosen to seize drugs imported by individuals who make trips across the border to buy them for their own personal use. For instance, on Dec. 1, 2004, The U.S. Attorney's Office, Southern District of New York, on behalf of the FDA, filed a civil complaint against Canada Care Drugs Inc. for the illegal importation of prescription drugs into the U.S. Canada Care was previously affiliated with Rx Depot Inc., a company that was engaged in the illegal importation of prescription drugs until November 2003, when the U.S. District Court for the Northern District of Oklahoma entered an order of preliminary injunction against the company and its affiliates to stop their cross-border drug sales activity. According to the complaint filed in the Southern District of New York, following the preliminary injunction order against Rx Depot and its affiliates, which was made permanent with the entering of a consent decree in August 2004, Canada Care severed its relationship with Rx Depot, but continued illegal activity in violation of the FDCA. The alleged violations include shipping unapproved drugs in place of prescribed medications and shipping in a way that could compromise the safety of the medications shipped.

Despite the FDA's current focus, the agency retains the authority to bring an enforcement action in any case in which a provision of the FFDCA has been violated. Still, considering the fact that open and notorious state-sponsored facilitation of cross-border prescription medication purchases has not brought a federal crackdown, individual medical practitioners who do the same are not likely to become targets at this time.