Move To Buy Drugs Via Canada May Gain As States Pile On FDA
Fri Sep 26,10:24 AM ET

By Sean Higgins

In a sharp escalation of the battle over letting Americans buy cheap prescription drugs from Canada, three states have called upon the Food and Drug Administration to lift its importation ban.

On Wednesday, Minnesota Gov. Tim Pawlenty, a Republican, became the third governor in two weeks to urge the FDA to OK reimporting U.S. drugs from Canada.

He joins two Democrats, Iowa's Tom Vilsack and Illinois' Rod Blagojevich. U.S. drug prices are rising too fast, they say.

"The point is something must be done," Pawlenty said. "The current model cannot be sustained."

California, Michigan, Maine, Massachusetts, Vermont, Kansas and Missouri are all reportedly mulling similar declarations.

Springfield, Mass., has vowed to fight an FDA order to stop its Canadian drug purchase program.

Prescription For Action

Agitation by state and local governments is certain to increase pressure in Washington to OK legislation letting Americans reimport U.S. drugs that have been exported to Canada.

The FDA has said all along that the safety of reimported drugs cannot be guaranteed. It refused to sanction importation in the Bush and Clinton administrations.

Drug makers are also lobbying hard against it. If Canadian-priced drugs flood the U.S. market, they could take major losses.

Safety arguments have worn a little thin. And drugs in price-controlled Canada's system cost an average of 40% less than in the U.S.

Many in Congress see Canadian drugs as a way to offset the estimated $400 billion cost of a Medicare prescription drug bill.

The House passed an importation bill in July, 243-186. But many senators say the House bill limits the FDA's authority too much.

When the drive in Congress started to stall, states stepped in.

"There is no question this is a demonstration of the snowball effect on this issue," said Ron Pollack, executive director of the nonprofit Families USA, which is lobbying for a Medicare drug benefit.

Blagojevich, who joined the cause earlier this month, said Illinois would explore buying drugs from Canada for state employees and retirees. He urged other governors to join his effort.

"If the federal government is not able to correct serious drug-price disparities . . . then it should give states the flexibility to pursue better prices on their own," he said.

Vilsack and Pawlenty came on board this week. Vilsack even sent his health care adviser to Vancouver, British Columbia, to discuss opening the border, The Washington Post reported.

The governors say buying via Canada would save state health plans tens of millions of dollars.

On Capitol Hill, lawmakers said the states' action shows Congress needs to resolve the issue.

"Drug costs are placing undue pressure on strapped state budgets nationwide," said Rep. Rahm Emanuel, D-Ill.

There is already considerable cross-border trade. An estimated 2 million U.S. consumers travel north to fill their prescriptions.

Until recently it has attracted little attention. But as the issue heats up in the U.S., governments and manufacturers can't ignore it.

The world's largest drug maker, Pfizer, said in August it won't sell to Canadian pharmacies that also sell in the U.S. The drugs it sells in Canada are "exclusively" for use there. Other drug firms have made similar announcements.

The Justice Department (news - web sites) recently shut down RX Depot, a U.S. firm that imports Canadian drugs.

Drugs are cheaper in Canada because it imposes price controls. If a drug maker doesn't agree to the price, its drug can't be sold there.

Roger Pilon, legal expert at the Cato Institute, said allowing importation of drugs may not cut prices much. Drug makers may simply raise prices abroad. "No drug maker is going to undercut his domestic (U.S.) profits," he said.

If Canada's government doesn't stem the flow of drugs to the U.S., drug makers may slash supplies to Canada, according to a study this week by the Fraser Institute, a Canadian free-market think tank.

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