Crackdown in Canada
By: Source: AARP Bulletin Today Date Posted: 2004-02-06 15:23:00-05:00
Americans may soon find it difficult to buy lower-cost prescription drugs from Canada if a tough new effort by Pfizer Inc. succeeds in closing off the pipeline.
In a letter sent last month to all Canadian pharmacies, Pfizer—the world's largest drugmaker—threatened to cut off all supplies of its products to any pharmacy that helps the cross-border trade.
The company's action "will prevent us from being able to supply Pfizer products to Americans," says Dave MacKay, chief executive of the Canadian International Pharmacy Association (CIPA), a trade group of licensed mail order pharmacies. "And if it's effective it could set a dangerous precedent [for other drugmakers] to choke off supply."
Pfizer, which posted revenue of $32 billion in 2002, makes top-selling drugs like Lipitor for cholesterol, Norvasc for high blood pressure and Celebrex for arthritis. These and many other medicines are much less expensive in Canada because its government regulates the prices of brand-name drugs.
Pfizer's move comes at a time when many cash-strapped American states and cities are considering buying drugs from Canada to curb soaring health costs. Over a million Americans are already doing so, although the practice remains illegal under American law.
GlaxoSmithKline was the first drugmaker, a year ago, to try to curtail cross-border sales. It was followed by AstraZeneca, Eli Lilly and an earlier Pfizer attempt. The companies refused to supply Canadian pharmacies they identified as selling to Americans. But the targeted pharmacies sidestepped the ban by buying supplies from others that had not been blacklisted.
Now Pfizer is pushing to close that loophole. In a Jan. 12 letter, the company told all licensed Canadian pharmacies that its ban on exporting "includes not selling, transferring or distributing products to any person that you know, or have reasonable grounds for believing, will or may export Pfizer products out of Canada." Any breach of these terms, it added, "will result in Pfizer refusing all further sales … to you."
The company also now requires its distributors to report past and current orders from pharmacies and to seek Pfizer's approval to fill orders over a certain size.
"This is the boldest challenge yet" to the cross-border trade, says MacKay, "and we see it as something we can't get around because they're threatening the wholesalers."
The situation is so serious, he says, that CIPA member pharmacies are advising American states looking for big discounts that they won't take on contracts for bulk purchases. "We just can't sustain that type of volume in the face of these constrictions from drug companies," Mackay says. Even California, with its huge deficits, has approached them. "And I said 'Sorry, guys, this can't happen. We can't do it.' "
And for individual American customers? One possibility is that the pharmacies will recommend alternatives to Pfizer products. When Glaxo first launched its ban, "we suggested alternative therapies to our patients," says Robert Fraser, director of pharmacy at CanadaDrugs.com. "Many seniors were so ticked off with Glaxo that they consulted their doctors and went that route."
CIPA is considering legal action, MacKay says, and also hoping for help from "allies" in the United States.
In Minnesota, state attorney general Mike Hatch is investigating whether Glaxo violated antitrust laws and conspired with other drug companies to block Canadian sales to Americans. He has filed a lawsuit seeking documents from Glaxo. If an order is granted, he says, "we'll be visiting each one of these companies [including Pfizer] with a lawsuit."
Pfizer says its rules reflect its "commitment to safeguarding the integrity of the pharmaceutical supply system and protecting the supply of Pfizer medicines for Canadians." It also cites concerns about safety and counterfeit drugs.
But it is not clear why targeting only licensed Canadian pharmacies would reduce counterfeiting. "The key thing about Canadian drugs is that they're safe," says Fraser. Shutting off the Canadian pipeline would only send Americans into the arms of counterfeiters, he adds.
And MacKay disputes the inference that selling drugs to Americans could create shortages for Canadians. Drugmakers, he says, "can ramp up production in about two weeks" if there's a surge in demand. If there's a shortage, he adds, "it's a contrived shortage."
In response, Pfizer Canada spokesman Don Sancton says: "Historically, we've been able to meet demand by Canadians. But production is not the issue here. The issue is that the export of our drugs is unauthorized and the import of them by Americans is illegal."
Hatch of Minnesota says the real issue is prices. "What the drug industry is trying to do is stop competition. They want to maintain an artificially high level [of U.S. prices]."
Congress continues to debate the logistics of allowing Americans to buy drugs from Canada legally—which, Hatch points out, essentially means importing Canadian price controls through the back door.
While lawmakers haggle over these issues, MacKay says, "I feel I have to throw a glass of water into everyone's face in the United States and say wake up! If you don't see we're getting our butts kicked here by the drug companies, we will not be available to you tomorrow. And then where will you be?
"If you lose Canada," he adds, "you lose the potential to legitimize this whole process."
preview