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Crackdown threatened on cheaper medicines

Siding with the pharmaceutical industry, the Food and Drug Administration is abandoning its relaxed view of Americans flocking to Canada for cheaper medications and is threatening legal action against those who "aid" the practice.

The FDA until now has been eager not to be seen punishing U.S. consumers, particularly senior citizens, who are seeking lower-cost medicines north of the border. But the agency's new regulatory stance, though still being defined, could lead to a collision with some U.S. insurance companies and others who help American citizens import prescription medicines. Drugs in Canada, thanks to stricter government pricing rules, can be as much as 80 percent cheaper than in the United States.

In a recent legal opinion, an FDA official warned third parties _ which could include such companies as UnitedHealth Group Inc. _ that they may be violating civil and criminal laws by making it possible for Americans to buy drugs from Canada.

All parties "who cause a prohibited act" can "be found civilly and criminally liable" under the federal Food, Drug and Cosmetic Act, William K. Hubbard, the FDA associate commissioner for policy and planning, wrote in a Feb. 12 letter.

It added: "Any party participating in" an import plan in which a health insurer or claims processor helps arrange a purchase in Canada "does so at its own legal risk."

No sanctions for violators were specified.

Hubbard said "if FDA were to take enforcement action our highest enforcement priority would not be actions against consumers." Still, the FDA's position could presumably lead some third parties to deny reimbursement for drugs purchased abroad.

Hubbard's letter is the strongest language yet employed by U.S. officials as the pharmaceutical industry struggles to deal with a rebellion over drug prices. The letter was sent in response to questions from New Orleans lawyer Robert P. Lombardi, who represents health plans. He declined to identify his clients.

Hubbard's opinion ratchets up the FDA's position by several notches. In October, referring to insurers and such third parties, he said, "if they're not actually importing drugs, I don't know what enforcement role we would have."

At that time, drug industry lawyer Peter Barton Hutt fired back, saying there was "no ambiguity in the law" and "the people who are causing the illegal importation of drugs are as guilty as the people who have shipped them."

In an interview, Hubbard said the agency is stopping short of targeting insurance companies. "But the letter was intended to try to say that if you engage in facilitating the importation of an unapproved drug, you may be vulnerable under federal law."

"We don't want to send the signal that anyone doing this is off the hook." He said the government's stance has toughened since fall because then "this was a new problem, and we were trying to be cautious."

The scope of such "reimportation" isn't clear, but anecdotal reports suggest it is increasing. At least 30 Canadian pharmacy services appear to offer sales to U.S. citizens over the Internet. With names such as thecanadiandrugstore.com and rxnorth.com., these companies are generally private. Billy Shawn, president of Canadian Drugstore Inc. in Toronto, estimated that "it's probably a $500-million-a-year business, and our sales have been going up and up and up."

That amount isn't yet a real threat to the U.S. pharmaceutical industry's $192-billion in annual sales. The industry nonetheless wants to stamp out the imports.

In January, GlaxoSmithKline PLC of Britain asked pharmacies in Canada to certify that they don't offer medicine to U.S. citizens over the Internet for use in the United States. Glaxo said it would cut off supplies for export to pharmacies that don't comply. Among the major products at issue are Paxil, a leading antidepressant, and Zyban, for smoking cessation.

Eli Lilly & Co. notified its wholesalers in Canada that if they supply Canadian pharmacies that sell drugs in the United States, they would be violating Lilly's contract with the wholesalers.

The FDA has allowed individuals to bring small amounts of medicine into the country for personal use. This exception had given many the impression that the agency would keep its hands off this area entirely. Now that the FDA has signaled its intent to become involved, it raises questions about how the agency, or a third party, could distinguish between minor personal use and the regular practice of buying outside the United States to find bargains.

At BlueCross BlueShield of Florida, the FDA's warning confirmed legal concerns already being scrutinized. The state's largest insurer does not reimburse members for drugs they have purchased in Canada, but recently said it was looking into the issue.

"When a company like us starts reimbursing for those purchases, I think it falls into an area that begs getting more information," said Dr. George Mayzell, manager and medical director of the Blues' pharmacy program. "I know it's a gray area about individual use, but if we were to pay, we'd have to do more due diligence on the legal end."

Some recent cases have given the issue greater prominence. In the fall, Texas health-claims processor SPC Global Technologies Ltd. offered a way for as many as 20,000 people enrolled in U.S. health plans to obtain medicine from Canada. About 250 drugs are offered at cheaper prices available in Canada. Patients get a U.S. doctor's prescription, and an SPC affiliate places an order with a Canadian pharmacy, which forwards the prescriptions to Canadian doctors to be rewritten. The drugs then are sent to plan beneficiaries.

In another case, UnitedHealth, America's largest health insurer, allowed 97,000 members of AARP plans it runs to buy drugs in Canada or overseas and be reimbursed. Jim Pogue, a UnitedHealth vice president, wrote to those members, "We have made an administrative decision to waive the requirement that a prescription drug be purchased in the United States or one of its territories."

UnitedHealth, based in Minnesota, said its policy merely helps Americans traveling overseas.

"We're just not in the reimportation business," said UnitedHealth executive Mark F. Lindsay.

_ Times staff writer Kris Hundley contributed to this report.

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