Canadian Internet Pharmacies May Not Be Up For Onslaught Of American Consumers
By Theresa Agovino / AP Business Writer
Saturday, December 13, 2003

NEW YORK -- As CEO of Canadameds.com, one of the popular new enterprises selling low-price prescription drugs from
Canada to U.S. customers, Mike Hicks is used to watching business grow fast.

But even he is unsure how he would respond if the city of Boston, which this week announced a plan to buy drugs from
Canada, asked his firm to handle prescriptions for a pilot program open to roughly 7,000 of its current and retired
employees.

"It would be exciting -- and frightening," said Hicks. "That would be a lot of stress on our operation."

Executives at Canadian pharmacies that sell drugs to Americans are watching with a mixture of delight and dread as more
and more cities and states announce they are exploring purchasing drugs north of the border to save money.

While they want business to keep increasing, they aren’t sure how to handle a massive influx of new customers -- or
even whether they could. They also don’t want to taunt the pharmaceutical industry, which is already limiting supplies
to Canada to discourage the sales.

This week, New Hampshire’s state government announced plans to purchase some drugs from Canada. And representatives
from a dozen states met with six Canadian drug companies in Atlanta to discuss business possibilities. So far, only
Springfield, Mass., has a program that allows its employees to purchase Canadian drugs.

"I think even if half the people talking about buying from Canada did it, there would be problems," said Hicks, whose
company is based in Winnipeg, Manitoba.

No one believes that Canadian Internet pharmacies are a long-term solution to soaring drug costs and the pressure felt
by state and city budgets. At some point -- and no one knows when -- availability will become an issue: There are only
31 million people in Canada, and there is no way drug companies will ship enough medicine there to supply possibly
millions of American state and city workers.

Some officials, like those in Boston, believe buying Canadian drugs will send a powerful message to federal regulators,
requiring them to act before supply becomes a problem.

"The more states and cities that buy Canadian drugs, the more pressure on the U.S. Food and Drug Administration to
address the problem of the high cost of medication in this country," said John Auerbach, executive director of the
Boston Public Health Commission.

It is illegal for anyone but drug manufacturers to bring their products into the United States, and U.S. regulators
have cracked down on some storefront operations. The FDA also says that the safety and quality of drugs imported from
Canada can’t be assured.

No one knows how many Americans are buying their drugs in Canada, where medicines are up to 50 percent cheaper because
of government price controls. The number of pharmacies supplying cost-conscious Americans is also unclear, but is
estimated to be between 80 and 100. Some are very small, so they probably could not supply a major city or state.

Since the beginning of the year, five drug companies announced they were limiting their supply to Canada to stop the
drugs from being shipped back to American consumers. Some Canadian Internet pharmacies have reported problems getting
drugs.

"At the end of the day, getting supply is getting more difficult and expensive," said Hicks.

Al Kula, director of pharmacy services at Toronto-based Meds Via Canada, said he hasn’t had any trouble obtaining drugs
to sell his American clients because the company has a chain of 42 drug stores besides its Web site. He said the
company fills about 3,000 prescriptions a day, and could go up to 10,000 without too much of a problem.

Yet Kula says it is difficult to say how many cities or states he could service. Both Kula and Hicks say their ability
to service new clients depends on how many people would want to buy their drugs from Canada, and what kind of medicine
those people take.

Hicks said he would need to know that before making any major commitment to expanding the business. He and Kula fear
that if the Canadian business grows exponentially, drug companies will take even more drastic measures to cut supply
and they don’t want to put Canadian clients in jeopardy.

"I don’t want to cause a drug shortage," Hicks said.

If the drug companies did cut off Canada, the government could break patents and allow generic production, Kula said.
But he’s not sure either the companies or Canada wants to get to that point.

It is unclear that it will. The states that sent representatives to the Atlanta meeting haven’t committed to buying
drugs from Canada for several reasons. Among them: the federal rules prohibiting it, and concerns that a reliable
supply could be assured.

"It is still a cottage industry," said Jill Floode, special assistant for health policy to Delaware’s budget director.
"I think the companies are going to have to decide whether they want to make it take hold."

SOURCE: The Detroit News
http://www.detnews.com/2003/health/0312/14/health-6801.htm

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