15 June 2004

Canadian Drug-Import Measure in Senate May Get AARP Support

June 15 (Bloomberg) -- AARP, which represents 36 million U.S. citizens ages 50 and older, may support a bill that enables Americans to import drugs from Canada, where government price controls keep prescription costs as much as 70 percent lower.

The measure, introduced two months ago by Byron Dorgan, a North Dakota Democrat, and Olympia Snowe, a Maine Republican, has the backing of 23 Democrats and Republicans in the Senate. The bill would require wholesalers and pharmacies importing drugs to register with the Food and Drug Administration.

``AARP is finalizing its support for this bill,'' AARP spokesman Steve Hahn said in an interview yesterday in Washington. An official announcement may take place tomorrow.

Drugmakers such as Pfizer Inc. and GlaxoSmithKline Plc may see a 40 percent decline in revenue from drugs that are purchased in Canada, according to Alan Sager, an economist at Boston University. Pfizer opposes legalizing imports because of safety risks, said Peter Corr, the company's vice president of science and technology in a June 2 panel organized by Bloomberg.

White House spokesman Brian Besanceney declined to comment yesterday when reached in Kansas City where President George W. Bush was promoting a new drug discount card available to seniors. Democratic presidential candidate John Kerry, a four-term senator from Massachusetts, reiterated today in speech in New Jersey that he supports importing drugs from Canada.

A spokeswoman for Snowe declined to comment, and a spokesman for Dorgan didn't return two phone calls seeking comment.

Record-Keeping

Under the Dorgan-Snowe proposal, the U.S. would impose fees on the wholesalers and pharmacies of no more than 1 percent of the value of the medicines to pay for the program. Importers and resellers would have to keep records tracking the medicines from factory to consumer to ensure against tampering. Medicines purchased abroad must be approved by the FDA and made in U.S.- inspected plants.

Purchases from Canada could begin within 90 days and from the European Union, Australia, New Zealand, Japan and Switzerland, in a year.

Drug companies say legalized imports of price-controlled drugs would curb profits in the U.S. that can be used to fund research. Bedford, England-based GlaxoSmithKline in January 2003 became the first drugmaker to restrict shipments to Canada to thwart sales to Americans, and New York-based Pfizer, Indianapolis-based Eli Lilly & Co., Madison, New Jersey-based Wyeth and London-based AstraZeneca Plc followed later that year.

AARP's Influence

AARP's endorsement may carry weight with lawmakers. The group's decision to support a Medicare bill last year helped persuade lawmakers to approve the biggest expansion of the government health insurance program for the elderly in 38 years, according to Senator John Breaux, a Democrat from Louisiana who helped negotiate a compromise on the measure. The law approved spending more than $400 billion on prescription-drug benefits over 10 years.

AARP spokesman Hahn said the group has always supported importation generally and considered it a ``side show'' during last year's Medicare debate. AARP hasn't yet endorsed any of three Senate bills, Hahn said.

As many as 60,000 AARP members quit the group over its endorsement of the Medicare bill, yet membership actually increased as more Americans reached the entry age of 50 and some quitters rejoined. Democrats including House Minority Leader Nancy Pelosi criticized the group for backing the Medicare bill and called it a ``giveaway'' to drugmakers.

AARP is now criticizing the drug industry over pricing practices. The group released a report last month finding that Pfizer, the world's largest drugmaker, White House Station, New Jersey-based Merck & Co. and other producers raised prices last year by an average of 6.9 percent for the 200 most commonly prescribed brand-name medicines, more than three times the rate of inflation.

FDA Position

A month after President George W. Bush signed the Medicare bill into law Dec. 8, AARP Chief Executive Bill Novelli said the group would lobby for changes to curb discrimination against older workers by employers and requirements for insurers to tell patients what drugs they cover before patients enroll in their programs.

While the FDA doesn't enforce a prohibition on imports for individual use, the agency last month sent a safety warning to Minnesota, which set up a Web site guiding residents to retailers abroad.

The FDA said last month it plans to issue similar warnings to other states. Wisconsin, New Hampshire, North Dakota, Iowa and Illinois are among more than two dozen states that either help residents buy drugs from Canada or are weighing employee drug import programs.

Some officials in the Bush administration say that opening the U.S. to drug imports would pose safety problems, including acting Food and Drug Administration Commissioner Lester Crawford in a May 26 interview. Health and Human Services Secretary Tommy Thompson said May 4 that importation is ``inevitable.''

U.S. consumers spent more than $1 billion last year to purchase prescription medicines from Canada, according to IMS Health Inc., which tracks prescription trends. The city of Springfield, Massachusetts, saved $2.8 million in the past year by importing prescription drugs from Canada for its employees and pensioners.

Task Force

The Medicare bill called on Thompson to convene a task force to determine what resources the government would need to oversee drug imports and how monitoring for counterfeits would work. The task force has completed its public meetings and Thompson must report on its findings to Congress by December.

Former FDA Commissioner Mark McClellan, who now heads the Centers for Medicare and Medicaid Services for Bush, said yesterday that the Department of Health and Human Services has been investigating whether drug importation can be done safely.

``People want to find a way to do importation safely,'' McClellan told reporters on Air Force One, where he was traveling with Bush to a discussion on Medicare in Kansas City. ``They know there's broader recognition than ever that there's a real safety problem that needs to be addressed.''

McCain, Kennedy

Other sponsors of the bill that AARP may endorse include Republican Senators John McCain of Arizona and Lincoln Chafee of Rhode Island, and Democrats Edward Kennedy of Massachusetts and Tom Daschle of South Dakota.

``For four years George Bush has had it backwards,'' Kerry said in a speech today. ``They want to export jobs overseas, but they won't let seniors import prescription drugs from Canada.'' Through David Wade, Kerry said yesterday that ``The Bush Administration's Medicare fraud has failed America's seniors.''

Alan Holmer, president of the Pharmaceutical Research and Manufacturers of America, a Washington-based industry lobbying group, predicted in April that the legislation would fail. Holmer's group represents Pfizer, Lilly and other makers of brand-name medicines.

Grassley, Gregg Bills

Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, has introduced his own drug-import bill. Grassley's proposal may merge with another measure written by New Hampshire Republican Judd Gregg, chairman of the Senate Health, Education, Labor and Pensions Committee.

Gregg's bill would allow U.S. residents to buy 90-day supplies of medications from Canada and European countries including Germany, Spain and France for their own use and not for resale. Internet pharmacies would have to pay a $5,000 licensing fee to sell to the U.S. Gregg's bill doesn't discourage Pfizer and other drugmakers from limiting shipments to Canada to restrict exports to the U.S.

Grassley said in March he had been negotiating with Kennedy, causing analysts including Friedman Billings Ramsey & Co.'s Andrew Parmentier to raise the likelihood of passage. Those talks later broke down, Grassley said. Grassley's bill would punish companies that restrict sales to Canada by taking away a tax deduction for advertising expenses.

FDA Technical Support

Gregg's bill, introduced two weeks ago, had seven co-sponsors as of yesterday, all Republicans. Grassley's, introduced in April, had no co-sponsors.

The FDA provided technical support to Gregg in writing his bill, according to McClellan, who sits on the administration task force studying how Americans may buy cheaper drugs in Canada without risking safety.

The House passed a separate drug-import measure last year proposed by Representative Gil Gutknecht, a Minnesota Republican. That measure bill would allow Americans to purchase drugs originally manufactured in the U.S. or produced in U.S.-approved facilities in countries including Canada, Japan, South Africa and European Union nations. Mexico isn't on the list.

To contact the reporter on this story:
Kristen Hallam in Washington

To contact the editor responsible for this story:
Robert Simison in Washington at

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