19 September 2004
Tracking the controversial global prescription industry, from the storefront to your front door.
Early one recent Wednesday, Werner and Marlies Kress steered their 1998 Buick Le Sabre into one of the many strip malls on Hempstead Turnpike and parked in front of a small storefront, Discount Drugs From Canada. In an envelope, they carried prescriptions for Werner's blood thinner, Plavix, and Marlies' osteoporosis drug, Actonel.
Inside the austere Levittown office, there's no aspirin for sale, or beauty supplies, or shampoo. There aren't even any drugs.
Like many elderly people without coverage for brand-name medication, the Kresses, both retirees on fixed incomes, save a bundle by ordering their drugs from Canada. And David Feinsod, who sits behind a computer terminal, is their portal to a growing $1 billion mail-order drug industry that has sparked controversy around the world.
For a three-month supply of Plavix, Actonel and other medications, the Kresses' total is $492.35 -- half what they would pay at a local drug store or under the new, Medicare-approved drug card. Feinsod prints out the order and faxes it to a pharmacy in Winnipeg, Canada. "So far, what I can see, the medicine is sealed, manufactured and made in the United States," said Werner Kress, a retired cabinet maker. "It's our drugs. Put it that way, it's as safe as from the drugstore."
But unlike the local Eckerd or CVS, the Levittown storefront is not licensed by the state pharmacy board, which considers it an illegal operation. Feinsod, who opened the store a year ago, is not even a pharmacist, though he says he never claims to be one. The 62-year-old spent much of his career promoting a camera manufacturer, not comparing the prices of blood thinners in the United States to those listed in Canada.
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Battle over prescriptions
Now, he is an unlikely player in a global policy dispute about whether seniors, or anyone else, should be allowed to order from Canada -- where government controls can keep prices at almost half the U.S. cost -- or any other country.
The world's leading drug makers are rushing to stop the flow of medication to these pharmacies, and some highly sought-after drugs such as the cholesterol-lowering Lipitor are becoming difficult to get from Canada. In response, Canadian mail-order entrepreneurs have begun to shop beyond their borders for medications -- to places such as India, Chile and Fiji.
Authorities say, however, that quality may be less assured in such countries than in Canada, and also that counterfeit drugs are more likely to surface in those overseas markets. The debate is expected to sharpen in the next few weeks as a federal task force releases a study on the safety of importing drugs from Canada.
"Ours is the safest drug distribution supply in the world," said Jack Cox, a spokesman for the drug maker Pfizer. "The Internet trade is blowing a huge hole in the safety net because it's unregulated."
Largely unfettered by regulation, the nimble Internet marketers are exploiting the basic economics that guide the global prescription drug trade. Drugs are far cheaper in industrialized countries outside the United States because those nations have price controls or national health-care plans. Every country has a different price-control system, which explains why the same drugs may vary in price nation by nation.
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A circuitous path
From Levittown, the Kresses drug order follows a circuitous, if well-worn, path. It goes to a pharmacy in Winnipeg, back to a New York State doctor for a required sign-off, again to Winnipeg as the pills are dispensed, on to the Canada Post plant where the packages are processed, to the international mail center at Kennedy Airport, and finally back to the Kresses' Bethpage doorstep.
The unlikely center of this fierce debate is quiet Winnipeg, the Silicon Valley of the Internet drug industry. The surrounding province of Manitoba is home to almost half of the estimated 120 pharmacies that resell drugs to Americans, and where a bunch of pharmacists who seem to know one another have given Americans an alternative to paying the world's highest prices for brand-name medication.
"The horse is out of the barn," said Mike Hicks, chief executive of canadameds.com, one of the industry's oldest Web sites. "Americans know now that they can get safe and effective drugs elsewhere."
Others believe it is not that simple. "I think people believe that they are going to get a deal by going to Canada," said Lori Reilly, deputy vice president for policy at Pharmaceutical Research and Manufacturers of America, based in Washington, D.C. "Fortunately, I think there are safer alternatives," including shopping around for the best retail price for a drug.
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The Canadian connection
More than 1,600 miles from Discount Drugs From Canada in Levittown is Nexus Drug Store, in another strip mall, on a leafy Winnipeg street. The faxes from Feinsod arrive in a back room where top-selling drugs for elderly customers line shelves and countertops.
Unlike traditional pharmacies, there is very little walk-in traffic. Nexus exists almost solely for Americans. It is one of 56 such businesses licensed by the Manitoba Pharmaceutical Association, the provincial regulatory body. The rise of Manitoba as the hub of the industry has partly to do with geography. It is situated smack dab in the middle of Canada and so Internet providers can toggle back and forth between U.S. customers in different time zones. The province also is where the industry was born. Or, at least, reinvented.
For years, people crossed the border in search of low-priced medications. But the market exploded in 2000 when a 25-year-old Manitoba pharmacist named Andrew Strempler posted Nicorette on eBay and watched as the smoking-cessation gum flew off the shelves. He broadened the business online to include drugs and soon Web sites emblazoned with maple leaves cropped up all over the Internet. Soon, the industry created 1,500 jobs in Manitoba alone, and an estimated 2 million to 3 million people, mostly Americans, now get their medication through Canada.
To some, the Web sites were a source of unwanted competition and represented a disruption of the safe system that guides drug distribution in the United States. But to others, they symbolized financial relief and easier access to life-saving medications.
"The price of drugs is outstripping salaries, it's crippling people on fixed incomes and the only way out seniors see is to go to Canada," said Rep. Tim Bishop (D-Southampton) shortly after appearing at a Southampton rally this month where the elderly were criticizing the high costs of prescription drugs.
Now, even cities, including Boston, are contracting with Canadian pharmacies to obtain medication for city employees, and Illinois is exploring importing drugs from the United Kingdom and Ireland. The drug plan that serves employees and retirees of upstate Schenectady County will soon allow its members to order from Canada, and residents in Minnesota and Wisconsin also can buy Canadian medication through those states' Web sites.
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Canada regulatory challenge
Overseeing this ever-growing industry has become a daunting task for Ronald Guse, the head of the province's regulatory authority. The Manitoba Pharmaceutical Association employs only one full-time inspector, and another half-time. Accounting for patients like the Kresses who order their drugs from Manitoba, Guse estimates that the number of consumers his agency oversees has increased in a few short years by hundreds of thousands.
"We have a challenge here," said Guse, the association's registrar. "We are the Manitoba Pharmaceutical Association, we are not the Central Intelligence Agency."
At Nexus Drug Store, pharmacist Robert Becker, 36, sifts through the orders from the Levittown storefront. In a quirk of the trade, he then re-faxes the prescriptions back to New York State because Canadian law prohibits pharmacies to fill an order unless it's signed by a Canadian-licensed doctor. The Nexus physician, who holds licenses for both countries, happens to reside in New York, and receives around $10 for each prescription.
That night, a light dusting of snow falls on the Winnipeg region and the morning chill brings with it the returned co-signed prescriptions. Between sips of coffee, Becker examines the stack of forms, double-checking their accuracy.
The doctor Nexus uses declined an interview -- not surprising because local medical authorities are disciplining those engaged in this practice. Six have been censured or reprimanded in Manitoba alone for what critics call the "rubber stamping" of prescriptions: co-signing prescriptions without examining the patients or checking their medical history. In 10 months, one doctor who was disciplined had countersigned 9,000 prescriptions.
To the founders of Nexus Drug Store, the crackdown on doctors who co-sign for orders is a thinly disguised effort to shut them down. They believe critics are most concerned about protecting drug makers' interests, not the patients, many of whom are on fixed incomes.
As the physician crackdown continues, the major pharmaceutical makers have applied their own kinds of pressures. They are refusing to work with wholesalers who in turn do business with the Internet and mail-order pharmacies. Drugs affected by the squeeze include blockbusters such as Lipitor. In response, the pharmacies such as Nexus are secretly filling some of their orders -- including Werner Kress' Celebrex -- through several corner drugstores they declined to identify. The drugstores charge a premium for the quiet assistance, however, and Nexus says the practice cuts their profit in half.
Still, Nexus officials want to keep supplying their customers with Canadian drugs -- they point out that each package of medication shipped from Canada carries an identification number, allowing it to be traced.
That Thursday afternoon, Nexus' pharmacy manager, Ana Branco, stuffs the Kresses' eight bottles of medication into an envelope. She also gathers 15 bottles of Parkinson's drugs for Mel Greenstein, a 61-year-old West Babylon resident who had ambled in after Kress to Discount Drugs From Canada.
As the major pharmaceutical companies tighten the Canadian drug supply, Nexus might also go abroad. "They are not giving us any choice," said Ben Du Bois, 43, Nexus' business manager. "And it's only a matter of time before they start to clamp down on international sources as well."
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Going global
Sitting in his office at the Canadian International Pharmacists Association, David MacKay holds up a package of the diabetes drug Avandia. On the back it reads, "Keep out of the reach and sight of children." Just under this sticker, the script of Greek writing is faintly visible.
From Greece, the Avandia was sent to a distributor in Doncaster, England, near Manchester, which then sent it to a company in Hendon, a suburb outside London, to apply labels in English. From there, it could be sold to a pharmacy in London, which would mail it directly to a patient in the United States -- who had placed the initial order to a pharmacy in Canada.
"Distance-based medicine is going global," said MacKay, spokesman of the association, which represents these online and mail-order Canadian pharmacies.
The premise seems simple enough: Order the best-priced drug from the most affordable place, wherever that may be. Proponents say the pills, wherever they are marketed, come from the same manufacturing plants. For example, Pfizer's big seller Lipitor is predominantly made in Ireland and distributed around the world. Even MacKay's packet of Avandia likely originated at a GlaxoSmithKline plant in Puerto Rico, even though it was packed in Mayenne, France, then shipped to a wholesaler in Greece.
"It proves that product in Europe is the same product that is consumed in the United States," MacKay said. "It's the same pill; it just has a different package around it. That's the point we have always made: Product isn't just made in the United States, it's made all around the world."
In Europe, drugs are commonly bought in cheaper countries such as Greece, then resold to patients in higher-priced places like Germany. Once a drug is approved for use by the European Medicines Agency, it can be sold across all borders within the European Union. The Canadian mail-order industry says the European example shows that drugs can be moved safely across borders.
The online or mail-order Canadian pharmacies are now poised to work with wholesalers in other countries. In just a few weeks, Jeff Uhl, founder of Universal Drug Store in Winnipeg, is traveling to London, Ireland, Spain and Greece to scout partner pharmacies. He said it's only a matter of time until his under-the-table relationship with other wholesalers, and local drugstores, will be severed. But Pfizer is moving to cut off those potential overseas relationships before they can begin. The company just informed wholesalers in the United Kingdom that it is now distributing only a certain amount of product to each one.
"Pfizer's moves do not worry me as of yet, and won't dissuade me from going to Europe," Uhl said. "It wasn't difficult for them to limit supply in smaller countries such as Canada and New Zealand, but will be more difficult for them to limit supply across all of Europe."
Across town in Winnipeg in a low-income neighborhood called Point Douglas, canadameds.com has already turned to four other countries, and within the next six months will add 12 more. The sources include Italy, Switzerland, Germany, France and South Africa. Already, a collage of wind-blown flags from New Zealand, Canada, Israel, Chile, the United Kingdom and Australia waft at the top of his newly designed Web site. Canadameds' slogan reflects the new trend: "Not just from Canada anymore! You choose the country, and you choose the savings!"
The customer can then compare the price of 8 milligrams for a 90-day supply of Avandia from various countries. Canada comes in lowest, at $217.93. Chile is next, at $270.07; then Israel, $287.07; the United Kingdom, $422.95; and finally, Australia, at $493.66. (The U.S. cost would be $560.79)
But as the trade expands beyond Canada, it also begins to operate outside the reach of regulatory oversight. Health officials complain that a handshake between two business people is not enough to assure the safety and authenticity of a drug. The latest advertisement from GlaxoSmithKline takes a hard jab at pharmaceutical e-commerce. A dotted road meanders from Texas, where the online-ordered medicines were postmarked, to a Web site based in China, to St. Kitts, where the credit card trail ends. The ad is based on an FDA investigation in which the agency ordered Ambien, Lipitor and Viagra supposedly from Canada.
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? Such Web sites tarnish the industry, MacKay acknowledged. That's why he says it's important to order from licensed Canadian pharmacies, who will in turn only work with licensed pharmacies in other countries.
Carmen Catizone, executive director of the National Association of Boards of Pharmacy in Park Ridge, Ill., argues that American consumers may be falsely comforted that it is safe to obtain drugs from other countries. "Now people based in Pakistan think they have an open license to ship into the U.S. without any fear of regulatory action," Catizone said.
However, the owners of the mail-order pharmacies say they are being fastidious and prudent about whom they partner with, often checking with the local regulatory authority for their standing. "I feel strongly that all the countries we're using safe," said canadameds owner Daren Jorgenson. "We inspect our pharmacies. It's not like we don't know who these pharmacies are."
As the online drug industry spills beyond the placid borders of Canada, it's far from clear that customers will continue to feel safe.
Werner Kress says he might stop ordering if Nexus acquired its drugs from outside Canada. And Mel Greenstein and his wife Deon Kauffmann say they grow more hesitant as the distance widens between their West Babylon home and the pharmacy filling their $2,169.61 prescription. Without the pills to control his Parkinson's disease, Greenstein's movement would be so restricted that he could literally freeze while walking out the door. They say they would still order from the United Kingdom or France to continue to save the $1,506 from their local pharmacy. Israel and South Africa? Maybe.
Third-world countries? Definitely not. "It's something I haven't given much thought, but will have to," Kauffmann said. "Where do I put my trust -- in Pfizer or Belarus?"
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A question of safety
At around 4 p.m. on Thursday afternoon, three and a half sacks of prescriptions wait near the back door of Nexus Drug Store. They are addressed not only to the Kresses' Bethpage home and Greenstein's West Babylon apartment, but to customers in Texas, Florida and other states.
A delivery man from Canada Post arrives and loads them all into his truck. The white Canada Post vehicle makes other stops, eventually driving to a postal center where, inside, dozens of bags of packages sit atop one another in large steel containers.
"This is out of here tonight, and in the States tomorrow," said Duncan Letby, an air transportation officer for Canada Post, as he surveys the bags.
The package's tracking number allows Feinsod and others to ascertain whether the medication has been held up at the U.S. border. Even though the FDA considers it illegal to import U.S.-manufactured drugs back into the United States, the agency says it does not have the staff to open the 5 million packages of drugs that are estimated to enter the United States each year.
FDA inspectors do perform spot checks, and Feinsod has had four orders out of almost 6,000 held up, though eventually all the packages were released. At some point, the Kresses' and Greenstein's medicine pass through Kennedy Airport, where most Canadian mail coming into New York is vetted.
Past spot checks of drugs entering the United States from countries such as Canada, Mexico, Japan and the United Kingdom found a litany of problems. There were unapproved drugs, controlled substances such as Valium and codeine, drugs withdrawn from the market because of safety concerns, and inadequate labeling.
"We know that some third-world pharmaceutical manufacturers are approaching Canadian pharmacies and saying, 'When your supply runs out, let us know if we can fill your supply,'" said William Hubbard, the FDA's associate commissioner for policy and planning. "We know those third-world pharmacies are selling counterfeit."
So far, Hubbard added, the FDA has just a few cases of U.S. residents becoming ill after taking medication they ordered from Canada. There's no evidence anyone has died.
Opponents say detecting fake or dangerous drugs at checkpoints such as Kennedy Airport can be an insurmountable task. Counterfeit medications account for 8 percent to 10 percent of the global pharmaceutical market, the FDA says. Some are direct copies of the drugs, some are missing the active ingredients, some are toxic.
"It's very difficult to detect counterfeit drugs, especially for the patients," said Eshetu Wondemagegnehu, the World Health Organization's technical officer and focal person on counterfeit drugs.
Counterfeiting is already a multi-billion-dollar market, one that public health officials fear will grow with more Americans importing from abroad. The World Health Organization has found that the industry flourishes in countries with less stringent regulations. For example, in some developing countries, half the drugs sold are either fake or substandard, said Hubbard of the FDA.
"What we see in developing countries we will see in the United States if there is no control," Wondemagegnehu said. "If you don't regulate the circulation of medicines through the Internet, then there is always that chance."
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U.S. study due by December
The Medicare law passed in 2003 requires the Secretary of Health and Human Services Tommy Thompson to study the safety of importing prescription drugs from Canada and other countries, and report back to Congress by December.
Even as the debate continues over whether to allow importation, the Canadian venue has become a lifeline for many elderly Americans without adequate prescription drug coverage. Werner Kress, for one, remains grateful that his medication came from Canada and not another country. "If it goes through too many hands," he said, "then you never know what would happen."
In Bethpage, Kress received his pills through Nexus five days after he ordered it from Feinsod's store in Levittown. In West Babylon, Greenstein did, too.
That afternoon, Deon opened three of the new bottles containing medicines to help Mel with his Parkinson's disease. Mel was at the kitchen table. With his hands betraying a slight tremor, he lifted each pill to his mouth and washed them down with water.
Deon has heard about the risks of buying drugs online, but she and Mel would drain their savings if they had to to pay full price for the drugs. Besides, she says she'd know if Mel took bad medication. His body would progressively stiffen. In the meantime, she tries not to worry about the risks. "We'll take our chances," she said.
BY DAWN MACKEEN
Staff Writer
Copyright © 2004, Newsday, Inc.
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