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US Lawmakers Debate Re-importation of Medicines from Canada - 2003-11-23

Americans pay more for their prescription drugs than any other consumers in the world: 38 percent more than consumers in Canada, 45 percent more than in France, and 48 percent more than in Italy. For years now, Americans who live close to the Canadian border have been traveling north to buy medicines. Many of these drugs were actually developed in the United States and then exported to Canada. Now, several prominent politicians want to formalize that practice by establishing a system that would allow states and cities to purchase drugs from Canada for their employees.

The list of politicians hoping to set up so-called "prescription drug reimportation plans" is substantial. So far, the governors of Illinois, Minnesota, West Virginia, Ohio, Michigan and Wisconsin have all established task forces to look into the possibility, and the mayors of Boston and New York have also said they'll consider drug reimportation from Canada for city employees.

"He asked us to take a look at the possibility of safely and effectively purchasing drugs in Canada for the state employees and retirees because, as many people have come to realize - especially seniors who don't have drug benefits - the drug costs in Canada are significantly lower for the brand-name drugs that we were looking at than here in the United States, in anywhere from the 40 to 80 percent range, depending on the drug you might be looking at," said Scott McKibben, who chairs a committee put together by Illinois Governor Rod Bladgojevich.

Prices are lower in Canada because the Canadian government controls the price of prescription medication. The American government, for the most part, does not. The Federal Drug Administration, which regulates the U.S. prescription drug industry, has opposed drug reimportation. Without the FDA's sanction, the practice is technically illegal. Federal officials say they can't guarantee the safety of medication purchased from outlets in Canada. That concern is echoed by the Pharmaceutical Researchers and Manufactures of America, known as PhaRMA. Wanda Mobius, a spokesperson for the industry group, says American consumers who buy their drugs in Canada may not be getting the medications they think they're getting.

"You know, the dangers of counterfeit drugs are so hard to track," said Ms. Mobius. "If you're getting a counterfeit cholesterol-lowering drug, you won't even realize that you've been taking [it] and the doctor will measure your cholesterol and find you're not responding, and if you're lucky, you've had no adverse effects, except for the fact that you could have been having real beneficial effects, and now you've just wasted three months of treatment."

But if Canadian consumers aren't getting counterfeit drugs from Canadian pharmacies, then there's no reason to assume that American consumers would, according to Mr. McKibben of the Illinois governor's prescription drug task force. He acknowledged that purchasing drugs over the Internet could be risky, because you don't know anything about the outlet you're purchasing from. But he says the plan he helped put together for the state of Illinois involves purchasing drugs from pharmacies he and his colleagues thoroughly investigated during a series of trips to the Canadian provinces of Ontario and Manitoba.

"Both the U.S. and Canada have comparable requirements at virtually every level for warehousing and storage of the pharmaceuticals," said Mr. McKibben. "The educational requirements and professional regulations of licensed pharmacists were as rigorous as those in Illinois, and we were able to project an annual savings of $90 million."

That's a pretty substantial savings, and other states and municipalities looking at prescription drug reimportation have come up with similar numbers. But according to John Graham of the Fraser Institute, a Canadian organization that monitors public policy, prescription drug reimportation could end up hurting patients in the long run. He says if American consumers stop paying American prices for prescription drugs, the pharmaceutical industry won't have the money it needs to develop new kinds of medication, and people from all countries will suffer.

"If you imposed Canadian prices in the entire U.S. market, and every American consumer got the Canadian price, that would lead to a drop in research and development budgets of about- depending upon the assumptions - between $5-15 billion, which is almost half of global pharmaceutical [research and development]," said Mr. Graham.

So in other words, American consumers are subsidizing the research that ends up benefiting patients around the world. John Graham says that may not seem fair at first glance. But he points out that part of the reason pharmaceutical research and development is so expensive, is that the American government requires companies to conduct multiple trials before they're allowed to market a drug.

"The FDA is actually a lot of the problem here," explained Mr. Graham. "I can't remember the name of the guy ... Rauschenberg, I think, a state senator from Illinois, he said, 'We make them spend hundreds of millions of dollars on the clinical trials and the testing, and that has to be rolled into the price.' And if you're not willing to pay the price, you have to give up some of the regulatory burden of the FDA. Now that's something that Americans are going to have to decide."

There's no indication that Americans or their representatives in Congress favor relaxing the regulatory standards imposed on research by the FDA. But last July, the U.S. House of Representatives did pass a bill that would allow Americans to buy reimported prescription drugs. The legislation is now being considered by the Senate.