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Across-The-Border Bargains
Ordering Prescription Drugs Online From Canada is Cheaper
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D E N V E R, Colo., March 8 — Colorado businessman Don Bozarth got the idea while trying to take care of his mother-in-law.
"I discovered pharmaceutical prices had doubled in the past 10 years," he said. "And as you know, most seniors who are on Medicare have no prescription coverage." |
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| Due to the rising cost of prescription drugs, many Americans are ordering their medications online from Canadian suppliers. (ABCNEWS.com) |
So he looked around for less expensive prescription drugs. He found them in Canada. "Everyone's seen the articles about seniors getting on buses and going to Canada but I believed there must be an easier way," said Bozarth.
After carefully studying the law, he discovered it was possible to place orders over the Internet — as long as there was a prescription and a doctor in Canada willing to review it and write the same prescription. Thus "www.canadianmedsusa.com" was born.
Carollee Hatch, 74, who is battling breast cancer, was one of the first customers. "In Canada, my tamoxifen would be $13.95, plus the $20 co-pay. Here in the United States I was paying $187! It's a tremendous savings," she said.
Hatch also buys her husband Claude's medicines through the company and says she is saving enough money to take a vacation this summer.
Sister Mary Kay Kottenstette, a 64-year-old nun and part-time Spanish teacher, is also sold on the plan. She is taking three medications to treat high cholesterol, gout and thyroid problems. "I have no health insurance, I only make $15,000 a year and I can't spend it all on medicines," she said. "Last year, I spent $1,068 on these three drugs; Lipitor, allopurinol and Synthroid. This year I'll be spending about $640. The savings are absolutely amazing!"
FDA Won't Punish Seniors
The Food and Drug Administration says that technically the practice violates federal laws. But a spokesman says the FDA looks the other way and does not enforce them. "We don't want to punish seniors," he said.
The FDA also says it cannot guarantee the purity of the drugs from Canada. But the truth is, in most cases, the drugs are identical.
When pressed on how she felt about the legality of all of this, Kottenstette was blunt. "You know what? When the laws are unjust, I really don't care," she said. "There are so many people without health insurance, without the means to take care of themselves, and it just isn't just."
Bozarth says demand is picking up and he plans to expand his service. He is careful to point out that all his company is allowed to do is assist those who have questions and need help placing their orders.
"The prescription drugs are mailed directly to the patients from a pharmacy in Winnipeg, Manitoba," he says. "I make a small percentage from the price of the prescription."
What's to keep the rest of us from ordering our prescriptions from Canada?
"Absolutely nothing," he says. "In fact if the trend continues, perhaps it will force the drug companies to do something about their high prices." |
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Montana accuses drug makers of illegally inflating prices
Montana's attorney general sued 18 major drug companies Monday, accusing them of an illegal scheme that inflated prices and cost the state and consumers tens of millions of dollars.
By exaggerating the wholesale prices of some drugs, the companies guaranteed large buying groups that purchase drugs for hospitals and clinics receive windfalls when reimbursed by government health care programs, said Attorney General Mike McGrath.
The 45-page complaint, filed in state District Court here, said that financial incentive to buyers increased companies' drug sales.
"Montana taxpayers have been cheated out of millions of dollars because they have paid this inflated average wholesale price," he said.
The scheme hurt taxpayers because they finance the Medicaid and Medicare programs that were forced to pay the exaggerated drug prices for patients covered by the government health care programs, McGrath said.
Consumers also lost money because their co-payments for prescription drugs were higher than they should have been, he added. In some cases, even 20 percent co-payments exceeded the true cost of medicines, McGrath said.
Companies named in the suit could not immediately be reached Monday, or did not return phone calls seeking comment.
The lawsuit names Abbott Laboratories Inc., American Home Products Corp., Amgen Inc., AstraZeneca, Aventis Pharma, Baxter Pharmaceutical Products Inc., Bristol-Myers Squibb Co., Chiron, Dey Inc., Eli Lilly and Co., GlaxoSmithKline Corp., Hoechst Marion Roussel Inc., Immunex Corp., Pharmacia Corp., Pharmacia and Upjohn Co., Schering-Plough Corp., SmithKline Beecham Corp., and Warrick Pharmaceuticals Corp.
The suit charges that the drug makers engaged in unfair and deceptive trade practices, Medicaid fraud and racketeering.
Montana's suit mirrors one filed by the state of Nevada on Jan. 17 and a suit filed in December by a coalition of 15 consumer groups against 28 pharmaceutical companies.
The lawsuits are partly based on findings from an investigation of drug makers by the U.S. Justice Department, U.S. Department of Health and Human Services and Congress.
The complaints focus on what the industry calls the average wholesale price, or AWP. That price, set by the drug companies without any verification, determines how much drug suppliers are reimbursed by Medicare and Medicaid.
"As a result of the fraudulent and illegal manipulation of AWP for certain drugs by the defendant pharmaceutical manufacturers, they and the other manufacturers have reaped tens of millions of dollars in illegal profits at the expense of American government payors and consumers," McGrath said in the suit.
The elderly on Medicare have been particularly hard hit because their co-payments for prescriptions are based on the bogus AWP charges, he said.
The goal of the companies' pricing scheme was to boost sales of their drugs, according to the complaint. Because AWPs reported by the drug makers are much higher than the prices paid for the medicines, those providing the drugs to hospitals and clinics got a financial windfall when reimbursed by Medicare and Medicaid.
The suit also said the pricing practices have had a dangerous effect of influencing physicians' decisions on which drugs to prescribe. Most of the medicines involved in the pricing scheme are cancer-treatment drugs, McGrath said.
The suit asks for unspecified restitution for losses to Montanans and the state, and for damages to punish the drug makers for their actions. It seeks fines of $2,000 for every false claim made by the manufacturers and for a court order requiring that future AWPs accurately reflect the wholesale prices paid by physicians and pharmacies.
He said he has no estimate of overcharges by the companies operating in Montana or what possible damages may be. But he noted that a recent report by federal General Accounting Office said such pricing practices resulted in $532 million in Medicare overpayments nationwide during 2000.
McGrath said he has talked to his counterparts elsewhere and other states may file similar suits of their own. |
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Is buying drugs outside U.S. worth lower cost?
When 67-year-old Walter Schull of Reno was recently diagnosed with prostate cancer, he found himself taking a self-taught crash course on prescription medication.
“This is my first (major) experience with prescription medicines,” Schull said. “I really didn’t know a lot about them.”
Schull did know that drug prices were higher in the United States compared to other countries. What he didn’t realize, though, was how much higher they actually were. Casodex, one of the drugs Schull has to take, costs $375.99 for a package of 30 50-milligram tablets at Walgreens .
“I’m looking somewhere around $25-30 a day just for medications, and this’ll go on for about six months to a year,” Schull said. “That’s more than $10,000 — and that’s if my cancer goes into remission after a year. That doesn’t even include my office visits.”
Then Schull learned from his doctor about canadameds.com, an online Canadian pharmacy based in Winnipeg. Its price for the same package of Casodex: about $157.
“I’m just damn happy I could get this stuff (for this price) somewhere,” Schull said. “(Prescriptions) really eat up your savings, and if I didn’t have these savings, I have no idea what I would do.”
Don’t blame Canada
Americans now fill a whopping 3 billion prescriptions per year, an average of 11 prescriptions per person, according to the Kaiser Family Foundation, a nonprofit organization that does research on national health issues. That translates to about $117 billion spent on drugs annually — a third of which is attributed to seniors.
But just as the demand for drugs keeps going up, so do drug prices. Drug companies cite inflation as one reason for the increases. But prices for the 50 most heavily prescribed drugs for seniors rose, on average, at twice the rate of inflation, according to a report by Families USA, a nonprofit health care advocacy group based in Washington, D.C.
This has led some Americans across the border into Canada and Mexico seeking deals on their medication. And with sites such as canadameds.com and CrossBorderPharmacy.com now offering prescription services by mail, seniors who couldn’t make the trip across the border have another alternative for getting their prescriptions outside the United States.
Reno resident Jim McGrew, who used to schedule trips to San Diego with his wife to get prescriptions from Mexico, now gets his acid-reflux medication Prevacid through canadameds.com. The drug costs him about $150 for 100 pills from Canada compared to $112 for 30 pills in the United States with his insurance card.
“If they can (lower prices) in Canada, why can’t they do it here?” the 77-year-old McGrew said. “I think it’s as sad as can be that I can’t just go to my local pharmacy and get a decent price for my drugs. I understand that the drug companies have to recoup their costs, but it’s the seniors who are being taken in the shorts.”
A high price to pay?
Caught in the middle of the pricing issue and cross-border drug purchases are U.S. pharmacies — especially independents already struggling from the onslaught of big chains.
“I already have a couple of customers who said they were going to (get prescriptions from Canada),” said Bill Locke, pharmacist for Hale’s Drug Inc. in Reno. “There’s not much you can do about it.
“We don’t have any control over price. It’s not the small pharmacies or Raley’s that are overcharging, it’s the drug companies who do the pricing themselves.”
Drug companies usually point at the large costs incurred through research and development when justifying increasing drug prices in the U.S. The average cost for developing a new drug, for example, is now $800 million, said Jeff Trewhitt, spokesman for Washington, D.C.-based Pharmaceutical Research and Manufacturers of America (PhRMA), which represents the country’s leading pharmaceutical and biotechnology companies.
“In 1980, the total amount of money spent by our companies was $2 billion,” Trewhitt said. “Last year, our companies, which were basically the same ones all the way through, spent $30 billion on research and development.”
Adding to the industry’s costs is the fact that only one out of five drugs being developed makes it to the market, Trewhitt said. Approval of a drug takes 10 to 15 years, during which capital is tied up without a return on investment.
Critics contend that half of the $800 million R&D costs mentioned actually aren’t used for research. Instead, they represent the “opportunity cost” or amount of return from capital a company would’ve made from alternative investments.
A study by Families USA based on reports submitted to the Securities and Exchange Commission also found that eight out of nine major pharmaceutical companies, including Merck, Pfizer and Bristol-Myers Squibb, spent twice as much on marketing, advertising and administration than R&D.
“For them to suggest that R&D is the only avenue they have to absorb costs is misleading,” said Amanda McCloskey, director of health policy for Families USA. “Many of the blockbuster drugs that have been developed also started in government or university labs with government funding. They get huge tax breaks from government, but when Congress tries to lower prices, they raise their arms and start screaming.”
For critics, the issue boils down to profit. The Kaiser Family Foundation rated the drug industry as the most profitable in the United States last year with a revenue percentage of 18.6 percent compared to an average of 4.5 percent for all Fortune 500 companies.
“That’s a solid, respectable profit margin,” said Trewhitt, adding that the industry returns 17 to 20 percent of its sales to R&D.
“It’s very important for companies to make their investors and stockholders happy; these people provide companies billions — not millions — and this is the money we use for R&D, so it’s essential to have that money coming in each year. When a drug finally hits the market they want a decisive return on their investments to justify the risks they’ve taken.”
The re-importation issue
Given how low drug prices are in Canada, it appears that consumers aren’t the only ones who could benefit from crossing the border.
“I can spend $1,000 to go to Canada myself, buy drugs there then sell them here, and still make money,” Locke said. “But I can’t do that because it’s illegal.”
Legislators led by Independent Rep. Bernard Sanders of Vermont have been trying to make it legal for suppliers and pharmacists such as Locke to do just that. But while drug re-importation legislation passed in both the House and Senate, it has yet to be implemented.
Strong opposition from the drug industry, along with safety concerns raised by the Food and Drug Administration and 11 of its former commissioners, has been cited for the re-importation legislation’s status.
“(Sanders) is playing with fire; he’s putting patients at risk,” Trewhitt said.
When a company sells medicine to another country, it loses its chain of custody, Trewhitt said, and at that point you don’t know whether or not a medicine has been stored properly. One out of eight medicines on the international market is also counterfeit, which is a serious problem, he added.
Advocates argue that the legislation has provisions in place to have the FDA test re-imported drugs. Sanders also released a report last year stating that at least seven of the 11 FDA commissioners who claimed re-importation was unsafe have strong financial ties to the drug and medical equipment industry.
But just setting up a new FDA testing program would take three to four years, Trewhitt said, and would eventually cost $93 million a year to run. Trewhitt also dismissed the relevance of the seven commissioners’ industry ties.
“They’re making it sound like we’re sinister and like it’s a bad thing to work for the most innovative pharmaceutical industry in the world,” Trewhitt said. “You’re talking about skilled and gifted health-care professionals who have worked with an industry that has produced life-saving medicines.”
Need for Medicare reform
If there’s one thing both sides do agree on, it’s expanding Medicare benefits for seniors.
“Re-importation will help some, but what we really need is to get seniors coverage they can rely on through Medicare,” said McCloskey of Families USA.
Advocates like McCloskey are hoping Medicare’s leveraging power would eventually help in lowering drug prices. The drug industry, on the other hand, believes Medicare should be able to cover drug costs without the need for lowering prices.
“It doesn’t make sense for Medicare to pay $42,500 for a coronary bypass operation and not pay $1,200 a year for a heart disease drug,” Trewhitt said.
“Drugs will not only improve quality of life but will also save the system money in the long run through fewer surgeries. A good example is the federal employees’ health benefit program. If it’s good enough for members of Congress, it should be good enough for the nation’s seniors.”
For now, seniors such as Schull and McGrew will continue to get their drugs from across the border to keep saving on drug costs. The practice doesn’t come without its drawbacks. For one, deliveries can take as many as 21 days because the mail-order prescription services have to consult with a Canadian doctor first; there’s also the question of how long it’ll take the shipment to go through customs.
Customers also won’t get the benefit of a face-to-face interaction, though the Canadian services do produce customer charts and check for drug interactions (Mexican pharmacies don’t require prescriptions, so consumers have to be on top of their medications).
“Unfortunately, just like with American pharmacies, if you buy a drug and your dosage or prescription changes, we can’t take prescriptions back because of tampering issues,” said Daren Jorgenson, chief pharmacist in charge of U.S. customers for canadameds.com. “That’s why we suggest people use our services if they’ve been maintained on a drug for some time already.”
Jorgenson estimates that canadameds.com gets 300 new customers daily. The fact that seniors are willing to go through the trouble of getting prescriptions outside the United States is an indication of just how serious the senior prescription problem is, McCloskey said. But despite the hassles of getting prescriptions across the border, the cost savings are well worth it, McGrew said:
“If I’m getting the same-quality drug that I get here, then why not? I think others should try it, too. You read an awful lot of articles about people choosing between their food, housing and drugs, and it just makes me sad how that sort of thing is happening in our country. I think it’s ridiculous.”
Price comparison
Here’s a comparison of online prescription drug prices between two Canadian pharmacies (canadameds.com and CrossBorderpharmacy.com) and two U.S. pharmacies (DrugStore.com and Walgreens.com). Canadian prices are subject to change depending on the exchange rate.
o Lipitor: the No. 1 prescribed cholesterol-lowering drug in the United States
$50.06 at canadameds.com
$52.16 at CrossBorderPharmacy.com
$84.43 at DrugStore.com
$93.99 at Walgreens.com
o Celebrex: the No. 1 selling arthritis drug in the United States
$15.49 at canadameds.com
$24.61 at CrossBorderPharmacy.com
$42.47 at DrugStore.com
$47.50 at Walgreens.com
o Tamoxifen: breast cancer drug
$8.26 at canadameds.com
$28.61 at CrossBorderPharmacy.com
$97.43 at DrugStore.com
$96.99 at Walgreens.com |
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Coloradans turn to Canada for Meds
Mark Flora uses a mouse to cross the Canadian border and land a 60 percent cut in the cost of his father's prescription medicine.
He clicks onto the online Canadian pharmacy canadameds.com and pays $215 for a 90-day supply of bromocriptine mesylate. The drug helps his 74-year-old father, James, a Lakewood resident with Parkinson's disease.
At Walgreens, King Soopers or other local pharmacies, the Floras would have paid $850 to $1,025 for the same drug.
"My dad is on Social Security and a pension, and basically he couldn't afford the drug he was required to take," Mark Flora said. "Affordability forced me to go through the hoops and order from Canada."
Likewise, 48-year-old Gregory Gille of Colorado Springs cut his monthly tab from $210 to about $100 for medicine to treat his chronic heart and gout conditions.
After 19 years in the semiconductor industry, Gille was laid off and lost his health insurance. He used an Internet search engine to shop for better drug prices.
"I started with pharmacies and spread out from there," said Gille, who ended up at the CrossBorderPharmacy.com Web site. "It took less than 30 seconds to crunch the numbers."
He found he could reduce costs by 50 percent.
Gille is one of more than 1,000 Coloradans who have quietly turned to CrossBorderPharmacy.com over the past month as a remedy to high prescription drug costs. The Calgary-based online pharmacy opened its doors on Jan. 23, and it has been inundated with requests from California, Florida and other states, said Dave Robertson, head pharmacist for CrossBorderPharmacy.
Others have turned to a variety of other online Canadian pharmacies. Seniors with Medicare HMO policies that have limited drug benefits, uninsured and others can quickly find price comparison charts for drugs such as Claritin and Lipitor.
Mark Flora discovered that canadameds.com charges $236.21 for 300 5-milligram tablets of the generic drug bromocriptine mesylate, a cost of about 79 cents per capsule. The brand-name version at Walgreens' Web site would have cost $899, about $3 per capsule.
canadameds.com is among the largest online pharmacy operations in Canada, shipping an average of 600 prescriptions a day.
Customers wanting to purchase drugs from Canadian pharmacies must provide a detailed medical history and have their doctor send a prescription, Robertson said.
Under U.S. Food and Drug Administration guidelines, U.S. residents can import up to three months worth of medications for personal use. Controlled substances such as pain medication are not allowed to be imported.
Flora said he got his drugs in factory-sealed bottles with expiration dates.
"The only inconvenience was that it's about a three- or four-week process," Flora said.
The pharmaceutical industry contends that lowering prices in the United States would impede research and development. Price controls result in fewer breakthrough medicines, said Meredith Art, a spokeswoman for Pharmaceutical Research and Manufacturers Association. |
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