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# Once just a trickle, Canada\'s Rx drugs pouring into USA Seniors seek bargains; FDA cracks down 

By William M. Welch\
USA TODAY

WASHINGTON \-- It began as a novelty: grannies riding buses to Canada in
search of cheaper medicines. But today, that search has mushroomed into
a cross-border war that pits desperate consumers and defiant state and
local governments against the powerful pharmaceutical industry and the
Bush administration.

From just a few million dollars a year in 2000, the importation of
price-controlled drugs from Canada has grown to a projected \$800
million this year and shows no signs of letting up. \'\'I\'ve never in
my wildest dreams imagined an industry like this,\'\' says Andy Troszok,
a pharmacist in Calgary, Alberta, and vice president of an exporters\'
trade group.

The Bush administration, echoing the arguments of drugmakers, is
fighting the medicine trade from Canada and elsewhere as illegal and
unsafe.

\'\'They are buying under buyer-beware conditions,\'\' Food and Drug
Administration Commissioner Mark McClellan says of the estimated 1
million Americans who import prescription drugs.

The border war is being driven by a rapid rise in the cost of
medications and the frustration of one in four U.S. seniors who have no
drug coverage. It\'s also fueled by the tepid economy and rising
unemployment in the USA, the ease of long-distance commerce over the
Internet and increased awareness of significantly lower drug prices in
Canada.

Frustrated by Washington\'s inability to control health costs, Illinois
Gov. Rod Blagojevich has proposed establishing a drug importation
program for state employees and retirees. Governors in Iowa, Michigan
and Minnesota are considering similar moves \-- steps that would
institutionalize the trade on an unprecedented scale.

State legislatures in Maine and Vermont passed resolutions this year
urging GlaxoSmithKline and other drugmakers to resume shipments to
Canadian pharmacies that had been cut off to reduce the drug trade. In
Rhode Island, a bill allowing Canadian pharmacies to obtain state
licenses to sell drugs to Rhode Islanders passed one chamber of the
legislature.

The mayor of Springfield, Mass., Michael Albano, has begun a drug import
program for city workers despite FDA threats against its supplier,
CanaRX Services, which is based in Ontario. \'\'We\'re mad as hell, and
we can\'t afford it anymore,\'\' he says. \'\'They can\'t stop this
movement.\'\'

**Seniors are \'not happy\'**

For drugmakers, the risk is not simply the loss of money through
Canadian sales. Imports remain a tiny share of the overall U.S. drug
market, which is expected to exceed \$200 billion this year. More
threatening is the potential collapse of a price structure that allows
drugmakers to charge as much as possible in the USA while complying with
government price controls in other countries.

The price structure \'\'is unsustainable,\'\' says Alan Sager, director
of the health reform program at Boston University\'s School of Public
Health. \'\'By hugging high prices in a death-grip, the drugmakers
increase public anger and thereby become the main force for legislative
action to simply cut prices.\'\'

Congress has gotten the message. An unusual coalition of liberal
Democrats and conservative Republicans has formed around legislation
that would make it legal for residents and U.S. pharmacies to purchase
prescription drugs from Canada and two dozen other nations. It passed
the House July 25, when 87 Republicans deserted their party\'s leaders
and joined 155 Democrats.

The issue faces an uncertain future in the Senate. But the right-left
coalition is creating new pressures on drugmakers, the White House and
Republicans, just as Congress rushes to wrap up for the year.

The president and his party\'s leaders say part of the solution lies in
their plan to overhaul Medicare. It would reduce drug costs for most
seniors by creating a limited prescription drug benefit for the first
time. Different versions have passed the House and Senate but remain
deadlocked in a conference committee that is working against an Oct. 17
deadline imposed by Republican leaders.

In political terms, President Bush and the GOP, which have received tens
of millions of dollars in campaign contributions from the pharmaceutical
industry, find themselves heading toward an election year defending
drugmakers\' pricing practices that charge Americans the highest prices
in the world.

\'\'Seniors have figured out what the pricing strategy is,\'\' says Rep.
Gil Gutknecht, R-Minn., a sponsor of legislation to legalize imports,
\'\'and they\'re not happy.\'\'

**Bus trips and Internet sales**

Americans 65 and older are the largest consumers of health care. Many
take multiple medicines that consume a large share of their fixed
incomes. But traditional Medicare offers no drug benefit, and more than
one in four Americans 65 and older have no coverage through other
sources, such as a former employer, a Medicare-sponsored HMO plan or the
veterans health system. As a result, seniors are a big market for
Canadian sellers:

**\*** Mary Music of Strongsville, Ohio, says her 11 medications for
cholesterol, high blood pressure and heart problems cost her \$900 for a
three-month supply from Canada. Buying them at home, she says, would
cost more than \$3,000. Since her first bus trip to Canada, the
80-year-old has been ordering her drugs by phone from the same pharmacy.
\'\'I just think it\'s a shame that we have to cross the border to get
them,\'\' she says.

**\*** Lois Gazvoda of Canonsburg, Pa., went to Toronto for drugs out of
desperation when she found herself without health insurance at age 62
and suffering from diabetes, high blood pressure and heart ailments. She
paid \$248 for a three-month supply of drugs in Canada that cost her
more than \$1,000 at her local pharmacy. \'\'That\'s a real savings,\'\'
she says.

**\*** Barbara Flowers, a Medina, Ohio, retiree who helped organize bus
trips to Toronto, recalls that on their first trip an older man wept
when he got his prescription filled. He had been doing without medicine
so his wife could afford hers.

\'\'The bottom line to this whole thing is you have ordinary God-fearing
people who live in the U.S. who cannot afford their medicine,\'\' says
Mike Hunter, whose pharmacy in Windsor, Ontario, sees U.S. customers
cross the bridge from Detroit every day in search of less expensive
drugs.

Farther west, sales to the USA over the Internet have become a big
business. Troszok, vice president of the Canadian International Pharmacy
Association, says the boom has transformed little-developed Manitoba
province into the hub of the Internet drug industry. With provincial
government approval, the industry has created more than 3,000 jobs
there.

While the buses still roll, hundreds of thousands of Americans who lack
drug insurance are taking advantage of Canada\'s government-regulated
prices without leaving home. They\'re using the Internet, faxes, phones
and mail to fill prescriptions.

If that\'s too complicated for some, entrepreneurs have opened scores of
storefront businesses across the USA. They come with unmistakable names
such as \'\'Discount Meds from Canada,\'\' a storefront north of the
nation\'s capital in Maryland. They place customers\' orders with
Canadian druggists and pocket a small commission.

The Gaithersburg, Md., storefront has been operating for six months from
a suburban medical and professional building. Pamela Carter, the wife of
the owner, says most customers want bargain prices without traveling to
Canada and are leery of ordering over the Internet. She says many are
not retirees but working people who lack drug coverage.

**\'We are enforcing the law\'**

While acknowledging they cannot stop the importation of cheaper drugs,
the FDA and Justice Department have begun efforts to crack down on
cross-border drug sales and an Oklahoma-based chain of storefront
sellers. A federal judge in Tulsa will convene a hearing Wednesday on a
Department of Justice lawsuit seeking to shut down Rx Depot, a chain of
85 storefronts in 26 states that acts as a liaison for consumers buying
medicines from Canada.

\'\'We are enforcing the law,\'\' McClellan says. \'\'FDA\'s job is to
assure drug safety in the United States, and unapproved, imported drugs
are illegal because FDA does not have the resources under current law to
assure their safety.\'\'

The pharmaceutical industry has begun to retaliate, too. U.S. drugmakers
have curtailed sales to certain big Canadian sellers and have threatened
to limit supplies to others. \'\'Every relevant agency from the FDA to
the DEA (Drug Enforcement Administration) has sharply criticized
imported medicines as unsafe,\'\' says Jeff Trewhitt, spokesman for the
Pharmaceutical Research and Manufacturers of America, the trade group of
name-brand drugmakers.

U.S. pharmacies, understandably, don\'t like to see business move to
their Canadian counterparts. Craig Fuller, CEO of the National
Association of Chain Drug Stores and a former aide to President Reagan
and Vice President Bush, calls for more government enforcement to stop
imports. \'\'We have laws on the books, and those laws ought to be
enforced,\'\' Fuller says.

Sen. Rick Santorum, R-Pa., who opposes the drug trade, says importation
threatens to undercut drugmakers\' profits that pay for research on
future breakthroughs. \'\'People love to beat up on this industry,\'\'
he says.

McClellan, an economist and doctor who was an aide to Bush before moving
from the White House to the FDA, agrees drug prices are too high in the
USA. He says a Medicare prescription drug benefit is one solution;
another is for other nations to agree to higher drug prices. \'\'They do
have an obligation to share the cost of developing new medication,\'\'
he says.

Critics, however, say profits \-- not safety or research \-- are at
stake. Drugmakers enjoy a tax break for research and development and
spend lavishly on advertising and lobbying. \'\'They cannot tell you a
single case they\'ve discovered of anybody getting ill\'\' from Canadian
drugs, says Rep. Rahm Emanuel, D-Ill.

The drug industry is one of the most powerful lobbies in Washington. It
employs hundreds of lobbyists, more than one for every member of
Congress, to fight any threat on Capitol Hill. One of them is Tony
Feather, who was political director of the Bush-Cheney campaign in 2000.

Drugmakers give money to both parties, but Republicans receive by far
the most. In 2002 election campaigns, the industry gave \$22 million to
Republican candidates \-- three-fourths of all its political
contributions, according to the Center for Responsive Politics. In 2000,
Bush was its top recipient, collecting nearly \$500,000. The top four
drug companies \-- Pfizer, Bristol-Myers Squibb, GlaxoSmithKline and Eli
Lilly & Co. \-- each gave 80% or more of their donations to Republicans
that year.

Opposing price controls in the United States is an overriding concern
for the drugmakers. \'\'We don\'t want somebody else\'s failed,
government-mandated, price-fixing schemes being brought into this
country,\'\' Trewhitt says.

But the savings available from Canada are so great \-- 85% less than
U.S. prices on some drugs, such as the breast-cancer treatment Tamoxifen
\-- that they are impossible to ignore. An overwhelming 71% of Americans
in a recent USA TODAY/CNN/Gallup Poll supported legalizing prescription
drug sales from Canada.

President Clinton signed such a bill in 2000, but it contained a
loophole requiring the nation\'s health and human services secretary to
certify the safety of imports before they would be permitted. Neither
Clinton\'s secretary nor President Bush\'s, Tommy Thompson, has made
that certification. The House bill passed in July would drop that
requirement and permit sales not just to citizens but to drug stores,
too.

It was the one bill that could bring together lawmakers such as Reps.
Dan Burton, R-Calif., a conservative who relentlessly pursued
investigations of Clinton, and Bernie Sanders, I-Vt., a socialist who
led some of the first bus trips to Canada in the late 1990s.

Burton cites his wife\'s unsuccessful battle with breast cancer and the
high prices American women pay for cancer treatments. He accuses the FDA
of acting \'\'in lockstep with the pharmaceutical industry\'\' to
protect prices and profits. \'\'They are allowing the theft, this
robbery, to go on,\'\' he charges.

*(Cover story)*