Cross-border drug trade looks overseas as Canada considers ban

Drug Store News, March 7, 2005 by Michael Johnsen

OTTAWA -- The Canadian government is looking into shutting down what is for them the gray market of exporting pharmaceuticals to individual Americans from online Canadian pharmacies. With an official government loan appearing imminent, the question now is: What's next for the cross-border trade that has emerged and flourished in Canada in the midst of America's health care cost crisis--will it really staunch the flow of reimported pharmaceuticals into the United States?

While any regulatory action on Canada's part certainly will put a crimp in the business, online Canadian pharmacy operators probably will just switch URLs and source their medicines from the European Union, said David MacKay, executive director of the Canadian International Pharmacy Association, the trade association created approximately two years ago to represent online Canadian pharmacies.

"We're going to scramble--and we're already scrambling--to try to line up alternative options for [American consumers] that are safe," MacKay explained. "[Until now], we have been engaging options overseas only for the products that were unavailable in Canada, and that's, a very small percentage compared to the entire database of patients we have. If we re told that we cannot get anything from Canada, and we have to convert all 2 million of those [American] patients over to foreign options, we're not going to be able to handle all of that yet." It's a matter of resources, he said: It'll take time to ramp up foreign pharmacy supply to meet individual American import demand.

MacKay said he spent the better part of last month in Ottawa, attempting to dissuade the government from quashing what has become a lucrative export practice. "It's a billion-dollar-per-year industry [U.S.$810 million]--4,000 jobs in-Canada [located] primarily in Western Canadian [provinces] like Manitoba," MacKay said, "[serving an] exclusively American market."

On average, CIPA claims its members save approximately 40 percent on the cost of medicines for between 1.8 million and 2 million American consumers.

"We have a natural mail order market cap, which we think is maybe 3 million, maybe 4 million at best," MacKay said. "The things that would have to change to make this a much more substantial trade is: One, there would have to be [U.S.] legalization of importation, and two, wholesale would have to be legalized. ... Neither of which we think is going to occur."

MacKay claims that all the medicines shipped into the United States are approved Canadian medicines. Even where supply has been cut off by seven large pharmaceutical manufacturers--AstraZeneca, Eli Lilly, GlaxoSmithKline, Merck, Pfizer, Sanofi-Aventis and Wyeth--MacKay made the case that supply does not come from nefarious sources. It certainly has had a significant effect because we cannot acquire the products from those companies through our wholesale network any longer," he said.

There are two solutions, posed MacKay. "One is we can acquire a trickle of product through domestic [Canadian] pharmacies. ... [Second], what we tend to do is offer the patient an option to be referred to a foreign pharmacy overseas, one that we have either partnered with or now own outright."

American consumers may have to wait up to eight weeks to get their hands on Canadian Lipitor, for example, but can get the drug shipped from one of the European Union member countries immediately. "The patient would have full disclosure on where the drug would come from," MacKay said. "Parallel trade of course is legal in Europe, which means that if you tap into one country, you can acquire drugs from other countries in the parallel trade system."

Meanwhile, drug store operators in the United States may have an opportunity to highlight the various pharmaceutical discount programs available to U.S. seniors. "It depends on why the person has been buying drugs in Canada," commented Mary Ann Wagner, president of the Pharmacy Care Alliance. If they are buying them in Canada because they truly cannot afford them here in the United States, there are a number of programs" available to Americans looking for a necessary discount on their medicines--programs such as the Medicare drug discount card for starters, she said, as well as patient-assistance programs sponsored by individual pharmaceutical manufacturers. "A lot of times, people just don't know how to get to those programs, but there's a wealth of information out there," Wagner said.