Mass. city ends drug plan that defied US

The Massachusetts city that stood up to federal regulators and inspired a national movement to import less expensive prescription drugs from Canada is calling it quits.

Three years after Springfield became the first city in the United States to buy drugs from Canada for about 1,500 municipal employees and retirees, the city has decided to stop offering its own health insurance coverage, including the Canadian drug importation plan.

Officials say they hope to save the financially troubled city up to $5 million a year by enrolling workers and retirees in the state's health plan, run by the Group Insurance Commission, starting Jan. 1.

Springfield gained national attention when former mayor Michael Albano launched the drug-import plan in 2003 in defiance of the federal government, which said it was illegal and potentially dangerous because of the risk of counterfeit or adulterated products.

The city said that there were no problems with the program during its operation and that it saved $3 million annually by purchasing drugs in Canada that were priced lower than in the United States. The city negotiated price discounts with a Canadian vendor, and employees purchased their drugs directly from the vendor.

Despite a series of warnings, the federal Food and Drug Administration never intervened to stop the practice.

``The Springfield program proved that it can work and work safely," said David MacKay , an international pharmacy consultant in Winnipeg, Manitoba. ``It was a bold move."

Large drug manufacturers sell the same brand-name products in many countries, and they are typically less expensive in Canada and elsewhere because government controls limit profits.

Springfield's action coincided with widespread consumer and political anger nationally over the skyrocketing cost of medicine, and the city became the focus of media attention, including an appearance by Albano on CBS's ``60 Minutes." Governors in other states soon set up websites to help their employees and residents import prescription drugs. Other communities and counties followed suit, including Fall River, Haverhill, and Revere in Massachusetts.

But Canadian drug imports never topped $1 billion a year nationwide, according to industry analysts, and the introduction this year of the federal Medicare Part D prescription drug benefit -- which provided government prescription coverage to seniors for the first time -- has blunted demand for drugs from Canada, they said. About 22.5 million people had enrolled in Medicare drug plans as of June, according to the government.

MacKay estimated that Medicare Part D has reduced sales from Canada by as much as 40 percent so far this year, although he said pharmacies are now reporting a rebound as spending by some senior citizens on the Medicare plan reaches into the gap in coverage that requires them to pay 100 percent of their prescription costs between $2,250 and $5,100.

Also, declining currency-exchange rates over the past two years have eroded much of the savings Americans once realized by ordering from Canada, making cross-border buys less attractive.

In addition, US Customs and Border Protection this year has stepped up seizures of prescription drugs, and the pharmaceutical industry and the FDA have issued a stream of warnings about the safety of imports.

Drug importation has ``cooled off a little bit," Albano said yesterday. ``I think the industry really accomplished something in that they have scared a lot of people."

The Pharmaceutical Research and Manufacturers of America , the industry's lobbying group in Washington, D.C., said it has logged 7 million visits to an industry website that warns of the dangers of importation and suggests alternatives, including drug makers' programs for free and discounted medicines.

``There are very real dangers to importing foreign medicines, and Americans are beginning to recognize these dangers," said senior vice president Ken Johnson.

The Medicare prescription drug program may have reduced demand for imports among individuals, but municipal leaders struggling with ballooning healthcare budgets remain interested, said Anthony Howard , president of CanaRx, the Ontario company that has the Springfield contract.

``We have over 100 municipalities and organizations, and we're growing tremendously," Howard said.

A US Senate bill to legalize all importation has 32 sponsors, including Massachusetts Senators Edward M. Kennedy and John F. Kerry . Similar measures have been passed by the House. But the last major push for a vote occurred in 2004. AARP says it expects importation to grow as an issue during this year's midterm campaigns.

After Canadian pharmacists began shipping large volumes of drugs into the United States four years ago, the pharmaceutical industry responded by restricting the supply available for importation into Canada. In response, Canadian suppliers began arranging for shipments through Great Britain, New Zealand, Australia, and Israel, among other countries.

But safety concerns have increased, as the drug sources have become more diversified. Groups that favor drug importation are working to develop programs that would certify various vendors. Nevada recently set up its own program for the licensing and certification of foreign pharmacies.

``If you just go on the Internet and type `prescription drugs' into Google, you don't know which hands you're going to fall into," said MacKay , the pharmacy consultant in Winnipeg .

``It really can be a buyer-beware market if you don't have some common-sense strategies."

Christopher Rowland can be reached at crowland@globe.com.