Tuesday, October 14, 2003

States battle fed for cheaper, imported medicine

By Theresa Agovino
The Associated Press

NEW YORK - The battle over importing prescription drugs is erupting into a border war of sorts.

Lured by the chance to cut costs in half, state governments hope to join the one city and legions of Americans who get their medicines from Canada, even as federal regulators and the pharmaceutical industry insist it's illegal and unsafe and step up efforts to stop it.

Mistrust hangs over the issue.

Drug buyers say there's no reason for prices to be as high as they are in the United States and that the Food and Drug Administration's stance is colored by drug companies' generous political donations. State officials, meanwhile, say rising prescription drug costs might force them to cut other services.

Manufacturers argue that they need the revenue to develop new treatments. In an attempt to cut the flow of drugs south, some have begun limiting the amount shipped to Canada in the first place.

"It feels like we are in an atmosphere of mutually assured destruction," Illinois Gov. Rod R. Blagojevich said.

Drugs are up to 50 percent cheaper in Canada than in the United States because of government price controls.

Springfield, Mass., has been paying for drugs imported by its workers from Canada since July. Illinois, Michigan, Iowa and Minnesota all recently announced they are exploring that option because rising prescription drug costs are forcing them to cut other services.

Other cities and states are said to be considering similar actions, while an estimated 1 million to 2 million Americans already buy Canadian drugs through the Internet, storefront operations or by crossing the border.

Four drug companies have begun limiting supply to Canada to curb importing, and the attorney general of Minnesota is investigating whether GlaxoSmithKline, the first company to do that, is violating antitrust laws.

Blagojevich predicts that if the industry doesn't lower prices, it will face a backlash that could limit or end the monopoly drug companies enjoy through patents.

The standoff hit a major crossroads last week in a Tulsa courtroom, where the Justice Department sought an injunction to close a chain of 85 storefronts that help seniors buy drugs from Canada.

The Justice Department complaint said the chain is a threat to public health and violates importation regulations. Carl Moore, founder of the chain, which operates under the names of RX Depot and Rx of Canada, insists that drug companies are gouging Americans and that he is breaking no laws.

A decision is expected after Oct. 31, and the outcome will have major implications for the importation debate, according to former FDA Associate Commissioner Marc Scheineson, now a partner at the Washington, D.C., law firm Reed Smith. An injunction would likely mute states' attempts to import drugs; a ruling in Moore's favor would clear the way for more imports.

Congress is attempting to create a Medicare drug benefit that would help senior citizens pay for prescription drugs, but its outcome is unclear, and that wouldn't help cash-strapped cities and states.

The House passed a bill that would allow drugs to be imported from several countries without FDA certification, but there is no corresponding bill in the Senate. A provision in the Senate Medicare bill would allow importation only if the U.S. government approves the drugs' safety.

FDA Associate Commissioner William Hubbard said the agency would be willing to craft a system where it can have authority over drugs imported to insure safety, but he said there are no good options on the table.

Hubbard said he understands the frustration over the costs but worries that Americans are sacrificing safety for savings.

"No one is vouching for the safety of these (imported) drugs," Hubbard said.

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