2003-11-07 - Government Cracks Down on Canadian Drug Imports


Justice Department Shuts Down Pharmacy Chain Importing Low-Cost
Medicines from Canada.

Food and Drug Administration Threatens Canadian Drug Exporter to US,
and Even Threatens US State and Local Governments Importing Low-Cost
Medicines from Canada


These acts show the government as a hired gun in two ways:

They show the government as a hired gun for the pharmaceutical
manufacturers, which like all corporations, champion the open market
and freedom from government interference, but will use government to
establish monopoly and stamp out competition whenever they want.

They show the government as a hired gun for the White House, which is
cutting off low-cost Canadian drug imports to force people to accept
destroying Medicare in return for a worthless prescription benefit
which also outlaws competition.

These are the kind of actions that are responsible for seniors
spending more of their budget for healthcare now than they did before
Medicare was passed.
http://home.comcast.net/~mlyon01/healthfiles/2003-10-22--workersincrea
singlyuninsuredbyemployers.html


Federal Judge Approves Justice Department's Request To Shut Down Rx
Depot.

Access this story and related links online:
http://cme.kff.org/Key=948.F3c.C.D.KYFrJX

Judge Claire Eagan of the U.S. District Court in Tulsa, Okla., on
Thursday issued a preliminary injunction that requires Oklahoma-based
storefront pharmacy chain Rx Depot to end operations as part of a
lawsuit filed against the company by the Justice Department, USA Today
reports (Appleby, USA Today, 11/7). In the lawsuit, the Justice
Department alleges that Rx Depot, which helps U.S. residents purchase
lower-cost prescription drugs from Canada, violated a federal law that
allows only prescription drug manufacturers to import medications into
the United States.

Attorneys for Rx Depot, which has 85 storefront pharmacies in 26
states, maintain that that company does not violate the law because
the storefront pharmacies only fax or mail prescriptions to Canada;
Canadian physicians rewrite the prescriptions, and Canadian pharmacies
send the medications directly to customers and pay commissions to the
storefront pharmacies (Kaiser Daily Health Policy Report, 10/14).

Rx Depot attorneys also maintain that because the FDA does not
prosecute individuals who purchase prescription drugs from other
nations, the Justice Department should not prosecute companies that
help U.S. residents with the practice (Wilde Mathews, Wall Street
Journal, 11/7). However, Eagan wrote in her decision, "It is
reasonable for the FDA to marshal its limited resources against
large-scale commercial operations like Rx Depot rather than
small-scale individual violators" (USA Today, 11/7). Eagan also wrote
that Justice Department prosecutors have "conclusively shown that the
relevant statutory provisions explicitly prohibit exactly what the
defendants continue to do," adding that Rx Depot established "a
nationwide business based on violating the law."

In addition, she wrote that prescription drugs purchased from Canada
"do not have the same assurances of safety and efficacy" and "their
quality is less predictable" than those purchased in the United States
(Wall Street Journal, 11/7). Eagan ordered Rx Depot officials to
inform customers within 10 days that the company is in violation of
federal law (USA Today, 11/7).



Reaction

Carl Moore, president of Rx Depot, said that the company will
"immediately appeal" the decision, the Journal reports. "We've lost
this round, and it continues. There are other rounds to go," Moore
said. He added that Rx Depot would cooperate with the decision in the
event that an appeals court does not stay the preliminary injunction
(Wall Street Journal, 11/7).

FDA Associate Commissioner William Hubbard said that the decision and
the cost of prescription drugs "points out the need for Congress to
take action to get affordable drugs to seniors" through Medicare, the
Miami Herald reports (Dorschner, Miami Herald, 11/7). FDA Associate
Commissioner Peter Pitts added that the decision "should really send a
message that we need real Medicare reform" to provide beneficiaries
with access to prescription drugs. However, Rep. Rahm Emanuel
(D-Ill.), who cosponsored legislation to allow the purchase of
prescription drugs from Canada, said that the decision "will only
resolve the members who want to get" such a bill passed (Wall Street
Journal, 11/7).



FDA Sends Letter to CanaRx

In related news, the FDA on Thursday sent a letter to officials at
Ontario-based CanaRx, which sells prescription drugs from Canada to
U.S. residents, to inform them that company operations are in
violation of U.S. law and that the agency may move to block company
shipments, the AP/Washington Post reports (AP/Washington Post, 11/7).

CanaRx supplies prescription drugs to a Springfield, Mass., program,
under which 20,000 city employees, retirees and their dependents who
receive health insurance from the city can fax their prescriptions to
a group of Ontario pharmacies and receive their medications in the
mail (Kaiser Daily Health Policy Report, 10/15).

Hubbard said that the FDA has partnered with Canadian officials to
address the issue but did not announce when the agency may take action
against CanaRx (AP/Washington Times, 11/7). Hubbard said that CanaRx,
although based in Canada, could face a civil lawsuit in the United
States "in absentia," the Boston Globe reports (Rowland, Boston Globe,
11/7).

However, Anthony Howard, president of CanaRx, said that the company is
"not breaking any laws in Canada or the United States." Albano said,
"We are not intimidated" by the FDA letter in Springfield
(AP/Washington Times, 11/7).



FDA May Prosecute State, Local Governments

The Globe also reports that the FDA may prosecute state and local
governments that establish programs to purchase prescription drugs
from Canada.

FDA Commissioner Mark McClellan said in a press release, "We are ...
committed to enforcing the law against those, whether governmental or
private, who endanger Americans by profiting from 'buyer beware'
schemes to import illegal, unapproved and potentially risky medicines"
(Boston Globe, 11/7).

"Programs that states set up are likely to be illegal for the same
reasons that the court found Rx Depot to be illegal," McClellan added
(USA Today, 11/7). However, the Globe reports the press release
appears to "contradict a stance articulated last month" by an FDA
official; on Oct. 23, Hubbard said, "We're not considering legal
action against cities or states." Hubbard said Thursday, "What I was
trying to say was we have not specifically considered any action
against any other government, because it's hypothetical, because it's
a moot point. The only government that's doing anything is
Springfield." Albano accused the FDA of a "flip-flop" on the issue,
adding, "It doesn't surprise me given the inconsistency on this
position all along" (Boston Globe, 11/7).

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Boston Globe, November 7, 2003

FDA mulls drug-import action Agency says it may charge states, cities


Seeking to clarify and strengthen its stance on Canadian prescription
drugs, the Food and Drug Administration said yesterday that it would
consider prosecuting state and local governments that establish
importation programs for their workers.

The statement -- coming on a day when the agency won a key court
battle in Oklahoma against a private US business involved in the
Canadian drug trade -- appeared to contradict a stance articulated
last month by an FDA official.

"We are . . . committed to enforcing the law against those, whether
governmental or private, who endanger Americans by profiting from
`buyer beware' schemes to import illegal, unapproved and potentially
risky medicines," FDA Commissioner Mark McClellan said in a press
release.

Last month in Boston, William Hubbard, the agency's associate
commissioner for policy and planning, said the FDA did not plan to
take action against the City of Springfield or other public entities
following Springfield's lead. Springfield so far has the only
importation program in the country. "We're not considering legal
action against cities or states," Hubbard said at a press briefing
following an Oct. 23 State House hearing.

Hubbard said yesterday that a Globe article the next day about his
statement misconstrued his comment. While the article said the FDA had
adopted a hands-off policy to government entities engaging in the
practice, that was not what he meant, Hubbard said.

"What I was trying to say was we have not specifically considered any
action against any other government, because it's hypothetical,
because it's a moot point," Hubbard said yesterday. "The only
government that's doing anything is Springfield."

Mayor Michael Albano of Springfield said the FDA was guilty of a
"flip-flop."

"It doesn't surprise me given the inconsistency on this position all
along," he said.

The FDA is attempting to strike a difficult balance on the question of
prescription drugs from Canada, which are 20 to 80 percent cheaper
because of Canadian government price controls. Importation is illegal,
but the agency has a policy of looking the other way while an
estimated 1 million to 2 million Americans order their drugs from
across the border. It has strongly warned against group purchasing by
cities, states, and private health plans.

It also has targeted US businesses that earn a commission by drumming
up sales for the Canadian pharmacies. The FDA scored a victory
yesterday against one such US "storefront" company offering access to
Canadian drugs. A judge in Tulsa granted the government's request to
shut down RxDepot Inc. and Rx of Canada LLC, businesses operated by
New England Revolution soccer player Joe-Max Moore and his father,
Carl Moore.

"This court is not unsympathetic to the predicament faced by
individuals who cannot afford their prescription drugs at US prices,"
wrote US District Judge Claire Eagan. "However, the defendants are
able to offer lower prices only because they facilitate illegal
activity determined by Congress to harm the public interest."

The FDA also issued a letter yesterday reiterating its position that
CanaRx Services Inc., Springfield's supplier of Canadian drugs, is
operating outside of the law. Hubbard said that CanaRx operates in
Ontario, but that it could be subject to US civil proceedings "in
absentia."