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The Seattle Times
SEATTLE - Stan and Mary Gauthier halved their medication bills when they started buying prescription drugs by mail from Canada more than a year ago.
Now the retired Washington state couple fears the savings are about to evaporate.
Both rely on asthma inhalers and other drugs manufactured by pharmaceutical giant GlaxoSmithKline, which in March became the first drug maker to cut back sales to Canadian pharmacies that ship medicine to Americans. A second major pharmaceutical company quickly followed suit, and others are expected to do the same.
Those restrictions are beginning to choke off the supply of some drugs, which means seniors accustomed to Canadian bargains may once again have to pay higher American prices.
The U.S. Food and Drug Administration and several states also have launched crackdowns on the growing number of companies that have opened stores in the United States to help seniors order Canadian drugs. Importing drugs from foreign countries is illegal, though regulators have until recently turned a blind eye toward the Canadian trade.
Collectively, the actions of the drug companies and federal and state governments may mark the beginning of the end for a phenomenon that started in the late 1990s with a trickle of seniors car-pooling across the border and has mushroomed into a nearly $1 billion-a-year enterprise serving more than a million customers.
"I don't think this is a forever industry," said Mike Oman, sales manager for www.e-drugsCanada.com, an Internet pharmacy based in Winnipeg, Manitoba, which no longer offers Glaxo products. "It will eventually be regulated away."
Already the number of new patients ordering Canadian drugs over the Internet has fallen at least 25 percent over the past three months, said Kris Thorkelson, president of the Manitoba International Pharmacists Association, which represents many of Canada's largest Internet pharmacies.
He attributes much of the drop to confusion over the impact of the drug-company restrictions and anxiety over the FDA crackdown. "People are worried they will get in trouble," he said.
Some Internet pharmacies are still able to refill Glaxo prescriptions for existing customers, like the Gauthiers - but for how much longer is unclear, Thorkelson said. Several companies have stopped selling Glaxo products completely and will probably have to do the same soon with drugs made by AstraZeneca Pharmaceuticals, the second major pharmaceutical company to restrict sales.
That leaves Gauthier, who also uses an AstraZeneca asthma drug, wondering when he'll feel the effect.
"I'm very concerned," he said. "The drug companies are putting out so much effort to keep us from doing this."
Many seniors are more angry than worried at the prospect of losing their low-cost drugs.
"I see people who can't eat every day because they have to buy their medications," said Cathy Lobdell, a retired credit manager who coaches other senior citizens how to buy Canadian drugs by phone or via the Internet.
"My medicine would be $500 a month if I didn't get if from Canada for 50 percent less," said the 76-year-old, whose regular drugs include several Glaxo inhalers. "It's just total greed by the drug companies - and our own government isn't doing squat for us."
Congress hasn't acted on proposals to add prescription-drug coverage to Medicare.
Drugs are significantly cheaper north of the border because the Canadian government caps prices. That means pharmaceutical companies don't make as much profit on drugs they sell in Canada as they do on drugs sold in the United States, where there are no price controls.
So far, sales of Canadian drugs to Americans have made only a minuscule dent in drug makers' bottom lines: Less than $1 billion out of U.S. sales that total nearly $200 billion a year.
But the cross-border drug trade is growing by 50 percent a year.
"It simply boils down to dollars and cents," Oman said. "This was never an issue until the Glaxos of the world started to worry that their profits are getting hit."
Drug companies insist their concern is for patients, not money.
Glaxo is cutting off Internet pharmacies to ensure an adequate supply of drugs for Canadian customers and to protect Americans from drugs that may not meet U.S. standards, said company spokeswoman Nancy Pekarek.
FDA and state regulators also stress safety concerns.
Though most Canadian drugs are identical to those sold in the U.S., Internet pharmacies are more difficult to regulate than conventional pharmacies and may be getting some of their drugs from foreign suppliers around the world, said Don Williams, executive director of the Washington State Pharmacy Board. That raises the possibility that counterfeit, adulterated or less potent medications may be shipped to American customers.
"As supplies from Glaxo and AstraZeneca dry up, we believe these (Internet) companies will turn to international suppliers - from Eastern Europe, from Asia - places that haven't been approved by the FDA or the Canadian government and don't recognize patents," Williams said.
American regulators looked the other way when seniors first began traveling across the border to buy drugs in Canada. Some seniors' groups chartered buses and made the trip accompanied by politicians advocating Medicare coverage of prescription drugs.
Business didn't really start to grow rapidly until the advent of Internet and mail-order pharmacies able to reach seniors across the country, not just in border states. Two years ago, there were only a handful of Internet operations in Canada, Thorkelson said. Today there are more than 100, and many seniors have abandoned bus trips in favor of computer shopping.
But many older Americans don't have computers or are wary of doing business online, so a new breed of bold entrepreneur has sprung up, opening dozens of shops across the United States - and attracting the ire of regulators.
At these storefront operations, clerks help senior citizens fill out prescription forms and send them to the companies' Canadian partners, where a Canadian doctor reviews and rewrites the prescriptions and a Canadian pharmacy fills the orders and ships the drugs.
The FDA fired its first shot in the crackdown in March, with a warning letter to Rx Depot, a storefront operation in Arkansas, whose owner says he plans to open an additional 200 stores across the country.
Several state pharmacy boards, including Arkansas', have also joined the battle, issuing cease-and-desist orders and seeking injunctions to shut the operations down.
With so much money at stake, observers agree the issue won't be resolved without a lengthy court fight - and possibly congressional action.
Congress already has passed a law allowing for the legal importation of drugs from Canada, but the Clinton and Bush administrations have refused to implement the change, arguing that it's impossible to ensure the drugs are safe.
Washington state's pharmacy board doesn't plan any enforcement action, Williams said. None of the storefronts here dispense medications, so they're not covered by state pharmacy regulations.
Operators hope to stay off the FDA's radar screen for as long as possible, said Chelle Davidson, co-owner of CanDrugsUSA in Bellingham, Wash. "We definitely went into the business with our eyes open, realizing we're not going to be able to sail along for years and years."
FDA has no plans to extend its crackdown to individuals buying drugs from Canada, either in person or on the Internet, said an agency official, who asked not to be named.
That's a good thing, said senior citizen Cathy Lobdell, who scoffs at the idea that drugs from Canada are inferior. "They're exactly the same drugs sold down here," she said. "The FDA is going to have an awful fight on their hands if they start throwing us old folks in jail."
(c) 2003, The Seattle Times. Distributed by Knight Ridder/Tribune News Service.