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It's Time for the Canadian Government to Take a Stand on Internet Pharmacies

Appeared in the Ottawa Citizen and Calgary Herald
Release Date: December 10, 2003
The Commissioner of the US Food and Drug Administration made a well-publicized visit to Ottawa last month to deal with the Internet prescription drug trade from Canada to the United States, a business that he is trying to shut down because he claims that it is unsafe for American patients. Although the FDA and Health Canada signed a Memorandum of Understanding that they would share safety information, the meeting appears to have been a disaster.

The FDA Commissioner, Mark McClellan, insisted that drugs shipped to American patients from Canadian Internet pharmacies are poorly regulated. Naturally, the Canadian Health Minister, Anne McLellan, took umbrage at this criticism of her bureaucrats’ ability to regulate, and criticized the Commissioner’s statements publicly.

However, Diane Gorman, Assistant Deputy Minister, recently wrote a letter to pharmacy associations and other interested parties expressing the ministry’s concerns about the consequences of this business. In May, Ms. Gorman wrote a letter to the Washington Post correcting that newspaper’s misinterpretation of Canadian regulatory guidelines. Gorman wrote that the newspaper “gave the inaccurate impression that Health Canada agreed to take responsibility for the safety of drugs exported to the United States. Importing countries - in this case, the United States - are responsible for ensuring that drugs meet their regulatory requirements.”

So, Health Canada cannot seem to make up its mind about this. Given the new Memorandum of Understanding between Health Canada and the FDA, the two regulators should be able to iron out any safety problems. However, failure of these two regulatory agencies to co-operate satisfactorily is not the big problem here.

The bigger problem is that the companies who actually make the medicines are absolutely opposed to it. Primarily because of Canadians’ low incomes relative to our neighbours, patented prescription drugs are often less expensive here.

The US market for prescription drugs is US$155 billion a year while Canada’s is only US$8 billion. Furthermore, well over half (perhaps almost all) of the industry’s profits are earned in the US. Drug makers will not tolerate a growing cannibalization of their US revenues. There is a growing risk that drug makers will stop supplying medicines to Canada, or at least not bother marketing new medicines here.

Some research-based drug makers have already announced plans to cut off supplies to wholesalers and pharmacies that divert medicines from Canadian patients to ones across the border. So far, these Internet sales are a trickle (of about $1 billion), not a torrent, so drug makers have not had to take drastic action. However, some American politicians have proposed changing American law to allow for wholesale “re-importing” of prescription drugs across the border, and making it illegal for drug makers to manage the international distribution of their medicines. This will increase the safety problem: laws that forcibly divorce manufacturers’ interests from their own distribution obviously increase the risk of counterfeit medicines entering the system. Even if Canada’s Internet pharmacies could serve the needs of America’s patients sustainably, they are not the best way to do so.

A better way would be for the US to change its own policies. US rules generally prevent drug makers from selling discounted medicines to these people because they must then give the same discounts to government drug plans, which comprise about 21 percent of the US market. Also, the FDA has continuously increased its regulatory burden on the approval of new medicines. These costly regulations add significantly to the price of US prescriptions. As well, there is the bane of the entire US healthcare system: the cost of litigation. All these must be reformed.

Canada’s Internet pharmacies also fail the test of free trade, viewed by most Canadians and our government as beneficial. Policies promoting “re-importing” violate the principle that manufacturers from around the world can compete against each other with minimal government interference. In order to operate globally, they require a legal environment that respects their ability to write binding contracts with those who distribute their medicines.

Of course, our federal government cannot control what US legislators do. Nevertheless, it can review Canada’s laws and regulations to ensure that medicines destined for Canadian patients actually get to Canadian patients. It’s time for the Canadian government to make this commitment publicly.