02 July 2004

Canadian drugs may be what the budget ordered

Newton employees and retirees ordered nearly 6,000 prescriptions of the cholesterol-reducing drug Lipitor last year -- for a total cost to the city of $434,300.

If Newton had used the Internet to order all of the Lipitor from Canadian pharmacies, it would have saved about $90,000, according to a Globe West analysis using average prices in each country. That amount of money would have been nearly enough to hire two teachers.

For months, Newton officials have been quietly studying the idea of importing drugs from Canada, where government price controls make prescription drugs 20 to 80 percent cheaper.

Individual employees and retirees would benefit as well -- they wouldn't have any copayments if drugs were imported -- but city officials are trying to determine whether the savings are worth the risk of doing something that technically is illegal.

Newton's top five drugs, which cost the city nearly $1 million last year, are on average about twice as expensive in the United States than they are in Canada.

For example:

The city spent $131,650 last year on Prevacid, which treats heartburn. The drug is more than twice as expensive in the United States than in Canada.

Nearly 1,150 prescriptions were filed for Protonix, which reduces acid in the stomach, at a cost of $112,260. A 90-day supply of the drug costs $277 in the United States and $164 in Canada.

Insurance costs in Newton have been rising at a steady clip, nearly doubling over the past five years. The city this year will spend about $28 million, or 10 percent of the entire budget, on insurance. About $8 million of that goes toward filling nearly 30,000 drug prescriptions.

Yet prescription drug costs and other insurance-related expenditures get lumped into the budget and receive little public scrutiny, largely because city officials feel they can do little to control the price increases.

Newton is not alone.

Many cities and towns have considered importing drugs from Canada. Boston is planning to set up a pilot program this month, and Marlborough is assembling a task force to make a recommendation in fall. Cambridge is also looking into the idea.

So far, Springfield is the only government entity in the state to operate such a program. The city is expected to save about $3 million this year, which is significant but much less than the $4 million to $9 million officials had predicted.

"Not as many people enrolled as we thought," said Chris Collins, the city's insurance director. "There was a little bit of reluctance at first, not necessarily because the drugs were coming through Canada, but because the drugs were coming through the mail."

About 3,200 current and former employees participated -- out of 10,000 who take prescription drugs on a regular basis. Collins predicted that as the stigma of ordering Canadian drugs through the mail wears off, another 3,000 employees will sign up for the program over the next year.

The FDA hasn't enforced the prohibition on importing drugs, and shipping in medicine from Canada has grown to a $700 million industry. Nearly 2 million Americans are currently individually purchasing the Canadian drugs, according to the Canadian International Pharmacy Association.

It is difficult to determine exactly how much money Newton would save. No one knows how many people would choose to participate in the plan, for example, and which drugs those people would be ordering. In addition, only maintenance drugs, those that are taken regularly to treat chronic problems, would be available under the plan.

Drugs also come in different strengths and quantities, which often makes it difficult to do a precise US-to-Canadian drug cost analysis. In Springfield, city officials took close to a year to evaluate prices in Canada and in the United States before moving forward with a plan.

Savings estimates from Newton officials, who began looking into the idea in February, have ranged from $400,000 to $2.4 million.

One of the most popular aspects of the plan would be the elimination of copayments, which could save families thousands of dollars a year.

Right now, the 4,842 active and retired Newton employees who use the city's insurance program pay between $5 and $30 out of pocket for each 30-day prescription drug. A vast majority of those who order the drugs are retired and, as a result, the most popular prescriptions are for treating ailments like high cholesterol and heartburn.

If the city begins to import the Canadian drugs, it would eliminate copayments and possibly reduce premiums as ways of enticing participants.

To be implemented, the program would need to be approved by the city's unions through collective bargaining. In interviews with several union representatives, the idea appears to have broad support.

"I suppose I'd have to be stupid not to want to do it," said Lieutenant Kevin Clinton, president of the Newton Firefighters Association. "If you go to BJ's and they're selling bottled water for six and a quarter and Cosco has it for six, where are you going to go? It's a no-brainer."

Between the three prescription drugs that he and his wife order, Clinton estimates that he would save at least $1,000 a year in copayments if Newton imported drugs from Canada.

The plan also has preliminary support from the Newton Teachers Association, the city's largest union, as well as the Newton Police Association.

"If you're looking at it as an employee, it's a win-win," said Jay Babcock, president of the police union and cochairman of the city's Insurance Advisory Committee. "But at the same time, the city has to save money, too. They have to make their numbers work."

The idea still doesn't have the full support of Mayor David B. Cohen, who is in charge of negotiating with the unions. Several informational sessions have been held with city employees, but so far the mayor's office appears to be moving forward cautiously.

"With something like this, time is not of the essence," Cohen said. "What is most important is coming up with a quality product." He also said that it is "critically important to make sure we know exactly what the savings are going to be."

Several city officials said that a Canadian drug importation program would not be implemented for at least several months and possibly as long as a year.

Matt Viser can be reached at [email protected]. 
By Matt Viser,
Boston Globe Correspondent
July 1, 2004

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