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
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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