Americans find jump in cost of drugs from Canada

By Christopher Rowland, Globe Staff, 9/1/2003

Americans are paying sharply higher prices when they buy many popular prescription drugs from Canada over the Internet, a sign that US drug makers are beginning to succeed in their efforts to disrupt cross-border purchases.

The biggest impact is visible with medicines made by GlaxoSmithKline PLC, which in January became the first company to try to cut off the pipeline of less expensive drugs from Canada to US consumers. According to a recent survey of Canadian pharmacy websites by an online drug-price monitor, the average price of drugs made by Glaxo jumped 22 percent from April to July.

For instance, the price of Flonase, Glaxo's popular nasal spray for allergy relief, went up 40 percent on one website, PharmacyChecker.com found. Advair, Glaxo's big-selling asthma medication, rose an average of 25 percent.

AstraZeneca PLC, which in April began attempting to restrict wholesale sales of its drugs to Canada to prevent their reimportation to the United States at lower prices, makes a top-selling heartburn medicine called Nexium. Its price has risen 16 percent in the past two months, to $67.08 for 28 pills.

The prices are still substantially lower than in the United States, where Nexium, for example, sells for $128.79. But combined with shipping costs and time delays, the increases are beginning to slow cross-border orders.

It isn't clear whether the price increases will reduce the flood of discount drugs into the United States or merely boost imports from countries like Mexico, France, and Spain, where safety risks might be greater, said Tod Cooperman, president of PharmacyChecker.com.

"If people start seeing problems getting it from Canada, they may become more adventurous," Cooperman said. "The gates are open."

Canadian pharmaceutical shipments to the United States are illegal, whether shipped via Internet orders, which account for about 90 percent of sales, or brought across the border in cars or buses.

But the industry has thrived nonetheless, as the Food and Drug Administration does not enforce purchases by individuals. So this year, Glaxo, AstraZeneca, Pfizer Inc., and Wyeth Pharmaceuticals have sought to curb the practice by imposing various supply limits on large Internet pharmacies they suspect of selling drugs to US consumers.

As a result, some Canadian pharmacies are having trouble filling orders, while others are limiting their business to filling domestic requests, said Andy Troszok, vice president of the Canadian International Pharmacy Association, which represents 35 Internet drugstores.

Troszok said revenue growth for Canadian Web pharmacies has leveled off this year after exploding to at least $700 million a year. In 1998, revenues were less than $100 million.

Drug manufacturers, Troszok said, "have been very successful [in] disrupting operations."

Pharmacies are not giving up. Like squirrels preparing for winter, they are stockpiling caches of popular drugs while awaiting the outcome of a House-passed bill in Congress that would make it legal to import drugs from foreign sources. They have also developed an underground network of small drugstores throughout Canada that serves as a conduit for fresh shipments of pharmaceuticals.

"It's a shell game," said Daren Jorgenson, president of Canadameds.com, a large Internet pharmacy. "In the short term, the customers are still getting the product in the US. But as the drug companies tighten the rope, this underground stock is going to shrink.

"The whole industry is going to be dead in a year," he said, "unless the American public gets more involved or the politicians succeed with this bill."

Other pharmacists were more hopeful, but agreed that the scramble for drugs has made their work more difficult and more costly.

"If you buy three bottles here, four bottles there, it really becomes problematic," said John Lubelski, owner of CanadaRx. Lubelski said he had enough cash to build up a three- to four-month supply of drugs. He declined to identify where he purchases his drugs, saying he did not want manufacturers to target that channel next.

Although Canadians insist that their distribution systems are safe, the FDA says the practice opens the door to counterfeit and improperly stored drugs and pharmaceuticals sold beyond their expiration date. Pharmaceutical Research and Manufacturers of America, the US drug industry trade group, has echoed the safety warnings. It also says companies must protect higher prices in the United States to ensure sufficient capital for the research and development of new drugs. Glaxo and Pfizer said they applaud anything that results in fewer drugs streaming in from Canada.

"It ensures that American consumers are receiving their medicines only through legal, licensed pharmacies," said Pfizer spokesman Nehl Horton. "What we're talking about is enforcement of the law."

Consumer advocates argue that the safety of drug consumers will be jeopardized if they cannot afford drugs or turn to sources in countries where regulations are less strict than Canada's. "They're putting people's lives at risk," said Elizabeth A. Wennar, president and CEO of United Health Alliance, a Vermont organization that helps people obtain drugs from Canada.

"Canada is a very safe place to be purchasing drugs. If they push those people elsewhere, they will have less control over safety than we have now."

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