Illinois May Buy Canadian Drugs
Move Escalates Battle on Prices
By Ceci Connolly
Washington Post Staff Writer
Monday, September 15, 2003; Page A01
Facing budget-breaking increases in prescription drug bills, the governor of Illinois took the first step yesterday toward purchasing lower-cost medications from Canada, a move that puts him in direct conflict with federal regulators and signals a dramatic escalation in the civil war over U.S. drug prices.
What began a decade ago with busloads of senior citizens trekking across the border in search of cheaper medicines has mushroomed into a nationwide rebellion. It has spread from small, nonprofit groups to the private sector, and now, to local and state officials who are defiantly ignoring warnings by the Bush administration and the pharmaceutical industry that drug reimportation is dangerous and illegal.
Gov. Rod Blagojevich, a Democrat, said he has directed the Illinois special advocate to draft a plan for buying inexpensive medications in Canada for as many as 240,000 state employees and retirees. The change could save the state tens of millions of dollars.
"The status quo on prescription drugs is intolerable and unacceptable," Blagojevich said in an interview yesterday. This year, the state is spending $340 million on prescriptions for its workforce, a 15 percent increase over last year.
"I am optimistic we will be able to save literally millions of dollars for the taxpayers and set a precedent other states will follow," the governor said.
Although Illinois would become the first state to pursue Canadian drug purchases for its workers, Blagojevich joins a much larger trend. Even as Congress debates whether formally to legalize the practice, millions of Americans -- including horse breeders in New Jersey, a retirement village in Ohio and the mayor of Springfield, Mass. -- already have decided for themselves that the financial savings are too large to pass up. Despite its claim that the practice is illegal, the FDA has generally looked the other way.
"There are a lot of bad drugs out there," said FDA Senior Associate Commissioner William Hubbard. "We fear a program like [Illinois's] would put people at risk."
"In my opinion the pharmaceutical corporations and the lobbyists have an absolute stranglehold on Washington," said Springfield Mayor Michael J. Albano. Since July, he has enrolled more than 800 city employees in a voluntary program that covers maintenance medications bought from a Canadian wholesaler.
Before launching the effort, Albano traveled to Canada to check out CanaRx and then became the first client, ordering his son's insulin and diabetes supplies from the company. To attract participants, the city waived co-payments on medications bought through the Internet service.
The switch saved Albano $250 this year and the city $852 for his family's medications. If a large percentage of the city's 9,000 workers and retirees join, the mayor estimates the city will save $4 million to $9 million a year.
"This is a revenue stream for Springfield, the only revenue stream we have," Albano said, noting that budget cuts have forced him to slash 323 jobs. "I know people have concerns about foreign countries, but we're talking about Canada here, not Iraq or North Korea or Iran."
Depending on the drug, the discounts in Canada can be as much as 80 percent, savings that have proven especially irresistible to senior citizens who do not have prescription coverage under Medicare.
"How pathetic can it be that the solution to the high cost of drugs is to try to sneak them across the borders," said Arthur Caplan, director of the Center for Bioethics at the University of Pennsylvania. "Even our government doesn't believe the price of drugs the industry is charging. The Veterans Administration and the Department of Defense don't pay these prices."
One of the vagaries of the U.S. system is that senior citizens -- major prescription medication users -- often pay the highest prices because they are not eligible for the bulk discounts government and private insurance programs provide.
To ease the strain, the industry distributed free medications to 5.5 million patients last year, said Jeffrey L. Trewhitt, spokesman for Pharmaceutical Research and Manufacturers of America. He said that what amounts to importing other countries' price controls not only endangers patients but also jeopardizes future investment in research that produces new drugs.
Trewhitt cited FDA warnings that medicine bought from another country may be counterfeited or tampered with, because it does not undergo the same strict inspections. The agency has said it has little desire to punish individual patients in need of lifesaving medicine.
But with private analysts and the FDA estimating $750 million in prescription drug revenue now flowing to Canada -- and entrepreneurs capitalizing on the trend -- the Bush administration is shifting to a more aggressive stance in the legislative and legal arenas.
"It's complicated and contentious and there's a lot at stake," said James N. Czaban, a food and drug lawyer at Heller Ehrman in Washington. "It looks like we're heading to a multifront war in the courts and on the Hill. I can easily see this becoming a very significant national case because of the policy issues involved."
Late last week, the Justice Department asked an Oklahoma judge to issue an immediate injunction against Rx Depot, a chain of 85 storefront businesses that helps process drug orders in Canada. Justice lawyers, working with the FDA, argue the company's role as a middleman makes it a de facto pharmacy that endangers patients by selling "unapproved" products.
"The fact that you have no drugs in the back room doesn't matter," Hubbard said. "We have been told by state pharmacy boards they are selling unapproved drugs."
In some instances, the unapproved drugs are products awaiting licensing in the United States, though in many others the term "unapproved" simply means the medicine was bought outside the country. However, many of the medications sold legally in this country are manufactured overseas.
Carl Moore, the Oklahoma oilman who founded Rx Depot, rejected the notion he is acting as a pharmacist and said he is exercising his First Amendment rights to provide information. "If you can find out how to build a bomb on a Web site, I should be able to tell people drug prices off the Web," he said.
Moore said his business is the logical extension of the cross-border bus trips FDA has permitted for a decade: "We developed a concept for people who live inland."
The FDA cannot discuss details of the case, Hubbard said. But he volunteered that an undercover agent who ordered two medications through an Rx Depot in Oklahoma received a generic substitute for one that has not yet been approved in the United States. The second medicine is an FDA-approved drug, manufactured in this country but "became an unapproved drug once it came from Canada," he said.
The agency conducted a similar undercover investigation into Springfield's program and asserts that Albano is allied with an unlicensed drug distributor. Albano counters the FDA "conducted a sting of the wrong pharmacy."
Hubbard acknowledged that FDA's discretionary authority has resulted in inconsistent enforcement. He said FDA hopes Congress and the courts will bring clarity to the situation and some financial relief to consumers -- perhaps before the 2004 elections.
"The answer is better coverage in this country and a good place to start is for Congress to finally reach bipartisan agreement on a Medicare drug benefit," said Trewhitt.
The House and Senate have approved 10-year, $400 billion drug plans, but resolving differences between the two versions has proved difficult. With final passage of legislation in doubt, Reps. Rahm Emanuel (D-Ill.) and Gil Gutknecht (R-Minn.) are pressing the Senate to adopt their bill legalizing drug imports from Canada and the European Union. Although it passed the House overwhelmingly, the White House, the FDA and some powerful senators are opposing it.
In the meantime, a growing number of Americans have decided they can't wait for Washington.
Despite the legal uncertainties, the Standard Breeders Owners Association in New Jersey signed up for a drug-purchasing plan with SUNRx, which supplies medications from Canada, if the company offers the cheapest price.
"After I've seen some of the discounts and realizing how much is added on to U.S. drugs, I absolutely believe this is the way we need to go," said Shay Cowan, the health care consultant at HRH of New Jersey Inc. who signed the breeders up for the Canadian program. For the first time in recent memory, Cowan said he has helped a client lower its drug costs.
"We are actually reversing the trend," he said. "There is nobody in the industry able to do that."
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