Healthy Skepticism Library item: 1064

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Publication type: news

Pharmaceutical firm cuts drug sales to Canada to fight cross-border buying
Associated Press 2003 Apr 21

Full text:

NEW YORK (AP) – AstraZeneca Pharmaceuticals LP has become the second major drug company to limit sales of its products to Canadian pharmacies and wholesalers as Americans increasingly buy cheaper drugs from across the border.

On April 8, AstraZeneca sent a letter to Canadian pharmacies and wholesalers that said some orders would be cut due to a new allotment program resulting from unexpected sales increases.

In January, GlaxoSmithKline wrote to Canadian pharmacies and wholesalers saying it would stop supplying businesses that resold drugs to Americans, citing concerns about the Canadian drug supply and patient safety.

Although AstraZenca’s letter wasn’t as direct as Glaxo’s, advocates for the elderly, analysts and Canadian wholesalers and pharmacy owners say the object is the same: to choke off the supply of Canadian drugs to Americans before the cross-border trade affects pharmaceutical companies’ profitability.

“Clearly, the pharmaceutical industry, which is one of the greediest in the States, wants to maintain their profitability,” said Representative Bernie Sanders, an independent from Vermont, who introduced legislation to try to derail Glaxo’s action.

Over the past several years, dozens of Internet pharmacies have sprung up across Canada offering Americans the opportunity to shave 50 to 70 per cent from their drug costs. Canadian drugs are often cheaper because of government price controls.

The businesses have flourished as drug prices in the United States skyrocketed.

AstraZeneca spokeswoman Rachel Bloom Baglin said the program is intended to ensure that the increased sales are not affecting Canadian citizens’ access to drugs and that historical buying patterns do not determine a business’ allocation.

When asked directly if the program is a response to the Canadian Internet pharmacy trade, Bloom Baglin said it was not a question that could be easily answered.

But she said that if AstraZeneca discovered reselling drugs to Americans was the reason for a business’ increased sales, supply to that company would be limited.

“We can’t condone illegal activity,” Bloom Baglin said.

It’s illegal to import drugs from Canada, but the Food and Drug Administration and U.S. Customs officials have ignored drugs mailed from Canadian Internet pharmacies.

More recently, however, storefronts have blossomed that help Americans use the Internet to order drugs from Canada. The FDA and local health officials have taken actions against the shops, including sending warning letters.

The storefronts are one reason that Jupiter Research estimates the Canadian Internet drug market will double to $1.4 billion US this year. The firm said the $700 million worth of drugs purchased through Canadian Internet pharmacies last year represents a lost market opportunity for drug companies of $1.3 billion, or about one per cent of the U.S. retail pharmaceutical market.

Jupiter analyst Monique Levy said cutting off drug supply to Canada is the most efficient way to stop the Internet business from expanding.

“It is much quicker than getting the FDA involved. Much more direct,” Levy said.

Meanwhile, Canadian internet pharmacy executives maintain it is ridiculous to say they are hurting drug companies profits.

“If people weren’t buying from me, they wouldn’t be buying,” said Dave Robertson, president of crossborderpharmacy.com.

Robertson said his orders of AstraZeneca drugs have been curtailed by wholesalers but that purchasing Glaxo medicines has become much more difficult, with deliveries to U.S. customers as much as three weeks behind schedule.

If other drug companies follow Glaxo and AstraZeneca, Robertson fears he may go out of business.

“These drug companies are giants,” Robertson said. “They have way more resources than me.”