Prescription Drug Importation: Just the Facts

Prescription Drug Importation: Just the Facts
June 1, 2004

Grace-Marie Turner

Grace-Marie Turner is president of the Galen Institute. (read full bio)

Election-year rhetoric is threatening to bury the real facts about prescription drug importation. The following facts are indispensable to understanding what is really at stake in the debate.

Imported Drugs Often Unsafe

  • The Food and Drug Administration examined mail shipments of imported drugs flowing through Miami, New York, San Francisco, and Carson, California to U.S. consumers in July and August, 2003. It found the packages often contained dangerous, unapproved, or counterfeit drugs. Eighty-eight percent of the drugs examined did not meet FDA standards. [1]
  • A second inspection blitz in November 2003 at mail facilities in Buffalo, Dallas, Chicago, and Seattle and courier hubs in Memphis and Cincinnati revealed similar problems: 1,728 unapproved drugs among the 1,982 parcels inspected. The unapproved drugs included "foreign versions" of FDA-approved drugs, recalled drugs, drugs requiring special storage conditions, drugs requiring close physician monitoring, and drugs containing addictive controlled substances. [2]
  • Canada makes only a very small percentage of the prescription medicines it needs for internal use and gets the rest of its supply from around the world. [3] Rising demand from U.S. consumers is causing increased shipments into Canada from countries with a history of counterfeit and unsafe drug production.
  • Between 2002 and 2003, drug imports to Canada rose dramatically from other countries noted for their high rates of drug counterfeiting. [4] There has been a 2,372 percent increase in imports from Iran and a 3,270 percent increase in imports from Brazil, for example. [5]
  • When asked about the potential impact of U.S. pharmacies limiting shipments to Canadian pharmacies, a Canadian pharmacy owner and non-pharmacist told surveyors for the Minnesota Board of Pharmacy, "We won't have any problem getting drugs. We have creative ways to get them." [6]
  • U.S. Surgeon General Richard Carmona is very concerned about "the extremely robust counterfeiting system" for prescription drugs, adding that counterfeiting "would pose significant challenges to any importation plan that we may be considering in the future." Carmona is the nation's top doctor, charged with guarding public health. He also chairs the federal government's task force on prescription drug importation. [7]

Warnings about Canadian Drug Imports

  • Canadian health authorities have warned the U.S. that Health Canada will not take responsibility for the safety of drugs exported from Canada to the United States. [8]
  • "Canadian authorities do not inspect medicines that are transshipped through their country bound for U.S. consumers, which opens a huge loophole for counterfeiters to sell us fake medicines masquerading as Canadian prescription drugs." [9]
  • Former FDA Commissioner Mark McClellan warned drug importation "creates a wide channel for large volumes of unapproved drugs and other products to enter the United States that are potentially injurious to public health and pose a threat to the security of our Nation's drug supply." [10]
  • The Illinois Pharmacists Association warns, "The medicine you buy from across the borders may be unsafe and ineffective." This ad ran immediately after Gov. Rod Blagojevich (D-Illinois) claimed his study of drug imports found "Canada's drug regulation and distribution system met American standards in every way." [11]

Savings Potential?

  • The commission that administers health insurance for state employees and retirees in Massachusetts found the state would save $10.4 million a year by purchasing lower-cost prescription drugs from Canada. But the commission recommended against moving forward with the plan, saying the savings would shrink to $1.4 million after waivers of copayments to incentivize participation by employees and loss of drug company rebates. And, the commission said, even the $1.4 million potential savings would not be worth the liability risks. [12]
  • Canada spent a total of $14.6 billion on prescription drugs in 2003, compared to more than $160 billion in the U.S. With Canada's market less than 10 percent the size of the U.S. market, it is unrealistic to expect to run a significant part of the U.S. drug supply through Canada to have its price controls imposed, and then have the drugs shipped back to U.S. consumers.
  • "It is likely that the intended cost savings for consumers would be absorbed by fees charged by exporters, pharmacists, wholesalers, and testing labs," according to FDA Commissioner Lester M. Crawford. [13]

Liability

  • Borderless drug stores, including those in Canada, require consumers to sign waivers that hold the seller harmless from any legal responsibility for the quality or effectiveness of the drugs sold. States that promote illegal drug importation programs, such as Minnesota and Wisconsin, say on their Web sites that they expressly disclaim "any and all liability from such importation or reimportation or the use of any products so acquired." [14] The reason is obvious: There is no realistic way to verify the safety of these drugs imported through Canada and other countries. [15]
  • "The bottom line is that [the state] will benefit by putting the drugs in the 'stream of commerce' and therefore must also bear the risk of loss if these drugs result in injuries," wrote Shikha Dalmia for Tech Central Station. The Illinois Supreme Court has recognized that "when a city creates a hazardous condition and someone is injured as a consequence, it must respond in damages, just as others are required to do." [16]

Impact on Investors

  • Minnesota Secretary of State Mary Kiffmeyer voted against Governor Tim Pawlenty's resolution to sell off Pfizer shares in an attempt to pressure the drug company to lower prescription drug prices. Kiffmeyer said that although efforts to reduce prices for U.S. residents are "laudable," the use of "funds that belong to state employees and retirees to pressure drug companies" is "not consistent with the board's fiduciary duty." [17]
  • Daniel Clifton, executive director of the American Shareholders Association, said such a move would devalue the holdings of more than 10 percent of the state pension fund. "The [drug] cost issue has become a political football with no real solutions being provided," said Clifton.[18]

Grace-Marie Turner is president of The Galen Institute. Her email address is gracemarie@galen.org. Conrad F. Meier is managing editor of Health Care News. His email address is meier@heartland.org.


Notes

[1] U.S. Food and Drug Administration, "FDA/U.S. Customs Import Blitz Exams Reveal Hundreds of Potentially Dangerous Imported Drug Shipments," FDA news release, September 29, 2003. http://www.fda.gov/bbs/topics/NEWS/2003/NEW00948.html

[2] U.S. Food and Drug Administration, "Recent FDA/U.S. Customs Import Blitz Exams Continue to Reveal Potentially Dangerous Illegally Imported Drug Shipments," FDA news release, January 27, 2004. http://www.fda.gov/bbs/topics/NEWS/2004/NEW01011.html

[3] Robert Goldberg, "Small Gains, Enormous Risks," in What's Wrong with Importing Drugs from Canada? edited by Joseph and Diane Bast, The Heartland Institute, 2003. http://www.heartland.org/Article.cfm?artId=13680

[4] Ward Health Strategies Inc., "Price Controls, Importation and the Safety of the Drug Supply Chain," October 20, 2003. http://www.wardhealth.com/index.php/article/articlestatic/58/1/5/

[5] Nigel S.B. Rawson, Ph.D., "Rx: Canadian Drugs," letter to the editor, New England Journal of Medicine, March 11, 2004.

[6] Michele Mattila and Stuart Vandenberg, State of Minnesota Office Memorandum dated December 24, 2003, detailing inspection report by the Minnesota Board of Pharmacy reviewing the practices of Canadian pharmacies.

[7] Associated Press, "Challenges seen in safely importing drugs," Miami Herald, April 7, 2004.

[8] Marc Kaufman, "FDA: Canadian Drug Position Misinterpreted," The Washington Post, May 26, 2003.

[9] Genevieve Hernandez and Jennifer Topps, Partnership for Safe Medicines, April 1, 2004.

[10] Statement of administration policy, July 23, 2003.

[11] AARP Bulletin, April 24, 2004, page 24.

[12] Christopher Rowland, "State panel: Drug plan isn't worth the savings," Boston Globe, November 21, 2003.

[13] Lester M. Crawford, (then) Deputy FDA Commissioner, letter to Senator Thad Cochran, July 17, 2002.

[14] State of Wisconsin, Prescription Drug Resource Center, March 2, 2004. http://www.drugsavings.wi.gov

[15] Conrad F. Meier, "Canadian Pharmacies Flunk Inspections," Health Care News, May 2004. http://www.heartland.org/Article.cfm?artId=14785

[16] Shikha Dalmia, "Foreign Drugs Will Bring Liability Headaches for States," TechCentralStation, December 19, 2003.

[17] Minneapolis Star Tribune, March 4, 2004.

Grace-Marie Turner

Grace-Marie Turner is president of the Galen Institute. (read full bio)