City may import medicines

Pressed by surging health care costs, officials in Newton are gingerly taking steps toward defying federal law and importing prescription drugs from Canada for city employees.

The program could be implemented within months and could save the city an estimated $2.4 million next year. Under the plan being discussed, the money would be divided between the city and the schools, providing a financial windfall for cash-strapped departments.

But it would also place Newton in a nationwide debate that has been simmering for months. The Food and Drug Administration has warned that it is illegal and unsafe to buy drugs from outside the United States. Price controls in Canada make drugs there far less expensive than in the United States.

The proposal, brought up by aldermen John F. Stewart and Kenneth Parker, was discussed at a recent meeting of the Programs and Services Committee, but no vote was taken.

Dolores Hamilton, the city's director of human resources, said there would be a series of discussions over the next two weeks with drug companies, union representatives, and the city's insurance providers to decide whether to move forward.

"This is real money we're talking about," Parker said in an interview. "It saves the city money; it saves employees money."

To be implemented, the program would need to be approved by the city's unions as part of this year's collective bargaining. The idea still doesn't have the support of Mayor David B. Cohen, who is in charge of negotiating with the unions.

Several aldermen said it would be difficult, but still possible, to implement a drug importation program without Cohen's support.

"It is something that is under serious consideration," Cohen said. "We will be meeting with the Insurance Advisory Committee soon, and there will be a number of proposals on the table."

Cohen was short on details, however, declining to elaborate on the proposals and saying it is "premature" to put a timeline on the discussions. He also would not confirm the $2.4 million figure that the aldermen have been discussing.

Right now, the 4,842 active and retired Newton employees who use the city's insurance program face monthly copayments of between $5 and $30 for each prescription drug. They also pay 20 percent of the premium cost.

If the city begins to import Canadian drugs, which cost 20 to 80 percent less there than they do in the United States, employees wouldn't have any copayments and their share of the premium would likely drop, according to Parker.

Parker said that the $2.4 million cost savings is based on estimates from other communities, and on 30 percent of employees participating in the voluntary program.

The city is on course to spend $31.8 million this year on insurance, according to Hamilton. Of that, nearly $7.9 million will go toward drug costs.

Newton's program would be modeled after Springfield's, which in July leapt to the forefront of the debate when it became the first municipality in the nation to begin importing drugs from Canada.

Springfield enlisted CanaRx Services Inc. to arrange for the pharmaceuticals to be shipped to the city, and that is expected to save the city between $4 million and $9 million a year.

So far, Springfield is the only government entity in the state to operate a program, although Boston is planning to set up a pilot program in July, and officials in Cambridge and Marlborough recently began studying the idea.

Robert Martel, executive aide to Marlborough Mayor Dennis C. Hunt, said the city met last week with representatives from Canadian pharmaceutical companies and will announce plans Wednesday to begin buying Canadian medicine.

"The consensus is that this is one thing we can do to control the cost of health care," Martel said, adding that he anticipates that a program would be in place by July.

Last year, the reimportation industry grossed more than $700 million a year, according to an estimate from the Canadian International Pharmacy Association. In 1998, the figure was less than $100 million. The drugs are purchased mainly from Canadian pharmacies through the Internet.

An estimated 1 million to 2 million Americans have also been individually purchasing the Canadian drugs. Although the practice is illegal, the FDA so far has chosen not to take action.

In Newton, it remains unclear what city and school officials would do with the money saved.

"It's such speculation," said schools Superintendent Jeffrey Young. "I haven't even thought about what I would do with $1.2 million, if it ever materialized."

Some have suggested that with the additional funds, the schools should eliminate bus fees, which several members of the Board of Aldermen have been against.

Young wouldn't say whether he would eliminate the fees, but he did say that it likely would be enough to restore all teaching positions that had been cut in his proposed budget for next year.

Cohen has not yet released a proposed city budget, and he declined to speculate on what the savings would be used for.

Peter Schworm of the Globe staff contributed to this report. Matt Viser can be reached at viser@globe.com.