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4/21/2004

Experts Debate Drug Importation

Donna Young

In the 1960s, a group of hippies known as the Merry Pranksters were famous for traveling the country in a 1939 rainbow-colored-painted school bus seeking enlightenment through the use of psychedelic drugs, including LSD.

But now, said Larry Levitt, vice president of Kaiser Family Foundation and editor-in-chief of KaiserNetwork.org, many former hippies are traveling on buses to Canada in search of another drugLipitorat a substantially cheaper price than what Pfizer's cholesterol-lowering medication costs in the United States.

Levitt moderated a recent debate about importation of products at the National Medicare Prescription Drug Congress in Washington, D.C.

Americans would not be traveling to Canada to buy drugs or searching on Web sites that advertise lower-cost medications if there was not a large price difference from what consumers pay in the United States compared with consumers in other countries, said Stephen W. Schondelmeyer, professor and head of the Department of Pharmaceutical Care and Health Systems and director of the PRIME Institute at the University of Minnesota.

"I don't think that people inherently have a desire to buy drugs on the Internet or to take bus trips to Canada to buy drugs or to fly there personally to buy drugs," he said. "It wouldn't occur if there wasn't a price difference."

Americans who buy brand-name drugs from Canada save as much as 90% on their medications, Schondelmeyer said.

Americans who purchase drugs from Canada or on the Web, he said, are "price-sensitive buyers" who would "drive across town to go to Sam's Club to get a lower price" on their consumer goods.

Consumers should be aware of the risks involved in buying medications on the Internet or from Canadian pharmacies, Schondelmeyer said.

But, he said, FDA has too often used concerns about counterfeit drug products as an argument against importation of medications.

The importation provision included in the Medicare reform legislation, signed into law in December 2003, would permit only pharmacists and wholesalers to import certain prescription drugs from Canada into the United States.

The Secretary of the Department of Health and Human Services must certify the safety of importation before the provision can be implemented.

Importation does not "allow or encourage counterfeits," Schondelmeyer said.

"In fact, I would argue that reimportation would allow us to, as effectively if not more effectively, deal with counterfeits because we could be even more stringent on the borders on shutting down what's coming in," he said. "I would argue that [the importation provision] does not allow Internet purchases from anywhere in the world except approved sources. We are not talking about buying anything you want from any country in the world on the Internet as reimportation, yet those are the arguments we hear brought up. You can get counterfeits from Belize, India, and China; that's not what's advocated by reimportation."

Schondelmeyer argued that importation must be evaluated using the same safety standards that FDA uses to approve drug products and direct-to-consumer (DTC) advertising.

"Most decisions made by FDA use both relative risk and manageable risk," he said. "There is not a drug on the market today that has 100% safety, but our FDA very wisely and carefully deliberates and chooses what risk and manageable risk is appropriate in American society and what is not, and they approve drugs to be on the market based on relative risk and manageable risk."

Many drugs that are designated as safe and effective by FDA have adverse effects associated with the product, Schondelmeyer said, "but we consider them safe if used appropriately by physicians, pharmacists, and patients."

DTC broadcast commercials provide very little information about a drug product, he argued, but FDA allows the ads to air.

Tom McGinnis, FDA's director of pharmacy affairs, acknowledged that drug prices "have been going up double digits each year" and "many of the uninsured consumers just can't afford those high prices of medications today."

But, he added, unless Congress provides more resources to FDA to monitor drugs imported from Canada, it would be difficult for the agency to protect consumers.

In addition to concerns about counterfeit drug products, he said, American consumers who purchase products in Canada are not notified when a drug has been recalled by Canadian health officials.

John E. Calfee, a research scholar with the conservative think tank group American Enterprise Institute, and author of Prices, Markets, and the Pharmaceutical Revolution, said that importation "just won't work" in a free-market system.

"There's no sense in which a manufacturer with $1 billion profits in the U.S. is going to significantly sacrifice their profits by shipping a larger portion of the drugs to Canada, which only accounts for less than 5% of the U.S. profit," he said. "They just won't do that. The evidence is very strong. They've already restricted supplies to Canada, and I think what we can expect is the manufacturers will continue to ship to Canada enough to supply the ordinary Canadian demand plus a good deal of margin of growth. But they're not going to double, triple, or quadruple or ship 10, or 20, or 50 times as much to Canada only to have those drugs shipped back to the U.S."

Should importation of drugs from Canada by someone other than the manufacturer be legalized, Calfee said, Canadians would have to reassess or possibly lift their price controls, which he said was doubtful. But even then, he said, prices would end up "roughly the same in the U.S. and Canada, which would be very, very slightly lower in the U.S. and higher in Canada."

"At that point, I think that the political process would take over," he said.