Diovan

Although Canada seems bent on thwarting any U.S. congressional effort to import Canadian pharmaceuticals on a wholesale basis, the country has left its Internet pharmacies intact, suggesting that personal importation of medicines from Canada and other industrialized nations will continue to grow.

It also means the pending Medicare drug benefit may have more of a negative impact on the import of medicines from Canada than any legislation that Canada passes.

A decree from Ujjal Dosanjh, Canada's health minister, in June made it clear that Canada could not serve as "America's drug store."

"In light of potential American legislation legalizing the bulk import of Canadian prescription and other medications, our priority must be the health and safety of all Canadians and the strength of our health care system," he stated.

The political posturing may be little more than a red herring, however, given that there currently is no bulk import pharmaceutical trade coming from Canada at Canadian drug prices.

"There really is no industry for bulk exports into the United States," said Andy Troszok, president of the Canadian International Pharmacy Association. CIPA was organized three years ago to represent the interests of Canadian pharmacies that ship medicines to American consumers. "The [U.S. Food and Drug Administration] has clearly stated that any bulk exports coming across the border from Canada would be seized immediately ... whereas individual importation has been allowed for the past six years."

Troszok said CIPA actually supports the ban on bulk exports. CIPA members aren't in that business, after all, and if bulk exports were allowed, it could squeeze the individual Canadian Internet pharmacies out of the export business altogether.

According to CIPA, the Internet business is reaching a plateau--but not from any slack in demand. "Overall, the industry is growing, but it's becoming more difficult to say at what rate because now drugs are being sent from various countries around the world," Troszok said.

And there's plenty of room to grow. Troszok placed the potential American consumer base at more than 100 million, versus the 2 million currently being served. In 2004, those 2 million customers generated more than $800 million in sales, Troszok said, according to IMS Health statistics. Other estimates have the illicit trade pegged at closer to $1 billion annually.

The new Medicare prescription drug benefit set to kick off in January represents a greater threat to the Canadian Internet pharmacy business than does any legislation on either side of the border. But Troszok said his constituents' concern is tempered by the complexity of the new benefit. "How many of the eligible people are going to sign up? We've heard that Medicare has so many restrictions and so many convoluted things in it that a lot of people are not going to sign up," he said.

And while Medicare may take its toll among the heaviest prescription drug users, namely seniors, there are plenty of uninsured and underinsured Americans who may look to the north for their pharmaceutical needs.

The only thing putting a crimp into the Canadian import business today is U.S. pharmaceutical manufacturers, many of whom have impeded the flow of product with their own individually enforced bans of Canadian wholesalers that supply the Internet pharmacies. "Companies such as my company [Extended Care Pharmacy] are on the list, and I can't get certain pharmaceuticals," Troszok said. "The pharmaceutical industry has been fairly successful at [establishing] roadblocks, but it hasn't stopped us."

In response, CIPA member companies have established partner pharmacies in the European Union, New Zealand and Australia. The Canadian Internet pharmacy takes the order and relays it to an overseas partner-pharmacy, which mails the medicine directly to the American patient. "[These are] legitimate, licensed pharmacies in industrial, first-world nations that are governed by similar pharmacy and manufacturing laws as Canada and the United States," Troszok said. "Many of my colleagues--all of the large players in Canada--have diversified globally and set up their own operations in the European Union or have set up partnerships."

State governments operating import programs in violation of federal law also are expanding their sourcing overseas. Last month, Govs. Rod Blagojevich, D-Ill., and Jim Doyle, R-Wis., and Rep. Rahm Emanuel, D-Ill., announced plans to expand their I-SaveRx prescription drug importation network to Australia and New Zealand. I-SaveRx previously had included pharmacies in the United Kingdom and Ireland in its source network. In addition to Illinois and Wisconsin, I-SaveRx serves Missouri, Kansas and Vermont.

But in the end, this behind-the-scenes overseas business being conducted on behalf of American consumers may feed the argument against personal importation. The FDA issued a warning July 29 concerning counterfeit Lipitor tablets being distributed in the United Kingdom.

"Consumers who purchased FDA-approved Lipitor products through legitimate U.S. pharmacies should not have received any of these counterfeit tablets and are not subject to this recall," the FDA stated. "But some U.S. residents [who] may have obtained prescription drugs from the United Kingdom through online or storefront operations that do not supply legitimate, FDA-approved products or through state-run drug importation programs that facilitate the purchase of unapproved foreign drugs ... may have received these counterfeit products."

Although the closed pharmaceutical distribution system in America is not impervious to counterfeiting, the problem is much more common throughout the European Union and other industrialized nations where many of the Canadian pharmacies are sourcing medicines.

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