Healthy Skepticism Library item: 1467

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Harris G.
Drug Makers’ New Intensity in Defense of U.S. Borders
The New York Times 2003 Oct 30
http://www.nytimes.com/2003/10/30/business/drug-makers-new-intensity-in-defense-of-us-borders.html?fta=y&archive:article_related

Full text:

On Capitol Hill, pharmaceutical executives say that legalizing drug imports would endanger American patients and sap profits that pay for research. But their message to Wall Street has been more reassuring – that the problem of drug imports, at least for now, is well in hand.

Pfizer’s chief executive, Henry A. McKinnell, said in a recent conference call with analysts that over the last few months Pfizer has been able to reduce the amount of its drugs being imported from Canada into the United States to less than $10 million a year from about $40 million. The chief executive of Merck & Company, Raymond V. Gilmartin, said in a conference call last week that imports of Merck drugs from Canada were not significant.

This difference in assessment in part reflects the uncertainty over how many countries Congress could include in any drug import legislation. If House and Senate conferees trying to hammer out a Medicare drug benefit opt to include a provision allowing imports only from Canada, it seems likely that the industry’s present upbeat descriptions would hold true. Mechanisms that Pfizer, GlaxoSmithKline and AstraZeneca have used to limit sales in Canada to local demand appear to have allowed the industry to keep cross-border traffic under control.

Many Internet pharmacies in Canada already report that they are having trouble getting pills to fulfill orders from the United States.

But if European countries are included in the import bill – as they were in a measure that was passed by the House in July by a single vote – the industry argues that the threat to both profits and drug safety would be significant.

“If there’s widespread importation, that massive value transfer will make it very difficult to fund research,’‘ a spokesman for Eli Lilly, Robert Smith, said.

There are voices of dissent, however.

William Burns, chief of Roche Holdings pharmaceutical group, told analysts this month that Europe’s long experience with imports across borders indicated that such trade need not be worrisome. “When we look at it from our window in Europe,” he said, “it’s rather difficult to see how it can be justified to prevent within the North American free trade area certain movements of product.”

Because the cross-border trade in Europe is legal, it is conducted largely by wholesalers and pharmacists, who are held responsible for the safety of the drugs they buy. Because imports into the United States are illegal, they have been arranged through back channels, like the Internet, where sales have proliferated.

Although top Food and Drug Administration officials oppose the current drug import proposals, one official there acknowledged that imports restricted to large wholesalers could be safe. The House bill that the industry and the F.D.A. are fighting would legalize imports from wholesalers as well as individual Internet transactions.

“Wholesaler importation would limit the scope of risk and allow regulators to focus on the quality of the drugs, depending on the authority they give the F.D.A.,” said an official at the agency who has been closely involved in the debate over the proposed legislation.

Just what the House-Senate conferees will recommend remains a mystery. Much of the groundswell in the United States favoring drug imports has focused on Internet orders. On Monday, the governor of Illinois, Rod R. Blagojevich, released a study that concluded that imports from Canada were safe and could save the state $56.5 million a year.

The governors of Iowa, Minnesota and Wisconsin have joined him in recent weeks in saying that they want to import cheaper medicines from Canada. In Springfield, Mass., the city is using a Canadian pharmacy for its employee health plan.

In New York City, the administration of Mayor Michael R. Bloomberg has announced its own plans to look into the option for the city’s health department and hospitals. Yesterday, Pfizer, which is based in New York and employs nearly 6,000 people in the city, released a statement saying it was “deeply disappointed” by the mayor’s initiative.

The importation debate is driven by the growing gap between drug prices in the United States and those in every other industrialized country.

The industry says that government price controls outside of the United States fail to compensate drug makers for the huge costs of developing medications. Its critics say that the industry would have more negotiating leverage if more products represented huge advances in medicine. They point out that none of the top 10 selling drugs in the world is a one-of-a-kind life-saver.

The two biggest sellers, Lipitor and Zocor, are only slightly more effective in reducing cholesterol than Mevacor, an older, generic pill, the critics observe.

The biotechnology industry, by contrast, has been able to win similar prices around the world for its drugs, which are often life-saving and in short supply. The biotech firms have been supportive of drug industry lobbying on the import issue, but many executives have remained low key.

For the time being, drug makers and the F.D.A. are trying to keep attention focused on the safety threat from back-channel drug imports.

Last month, the F.D.A. announced that spot inspections of 1,153 mailed packages containing drugs from abroad found that most were counterfeit and many were dangerous.