|AstraZeneca acts to curb drug sales to U.S. via Canada
NEW YORK (APOnline) — AstraZeneca Pharmaceuticals (AZN) has become the second major drug company to limit sales of its products to Canadian pharmacies and wholesalers as U.S. residents increasingly buy cheaper drugs from across the border.
|Updated 4:21 PM PDT April 21, 2003
On April 8, AstraZeneca sent a letter to Canadian pharmacies and wholesalers saying some orders would be cut due to a new allotment program initiated because of unexpected sales increases.
In January, GlaxoSmithKline told Canadian pharmacies and wholesalers it would stop supplying businesses that resold drugs to residents of the USA, citing concerns about the Canadian drug supply and patient safety.
Although AstraZenca's letter was not as direct as Glaxo's, advocates for the elderly, drug industry analysts and Canadian wholesalers and pharmacy owners say the object is the same: to choke off the supply of cheaper Canadian drugs to U.S. residents before the cross border trade affects pharmaceutical companies' profitability.
"Clearly, the pharmaceutical industry, which is one of the greediest in the states, wants to maintain their profitability," said Rep. Bernie Sanders, an independent from Vermont, who introduced legislation to try to derail Glaxo's action.
Over the past several years, dozens of Internet pharmacies have sprung up across Canada offering U.S. residents the opportunity to shave 50% to 70% from their drug costs. Canadian drugs are cheaper because of government price controls. The businesses have flourished as drug prices in the USA skyrocketed.
AstraZeneca spokeswoman Rachel Bloom Baglin said that company's program is intended to ensure that the increased sales are not affecting Canadian citizens' access to drugs.
When asked directly if the program is a response to the Canadian Internet pharmacy trade, Bloom Baglin said it was not a question that could be easily answered. However, she said if AstraZeneca discovered reselling drugs to U.S. residents was the reason for a business's increased sales, supply to that company would be limited.
"We can't condone illegal activity," she said.
It is illegal to import drugs from Canada but the Food and Drug Administration and U.S. Customs officials have ignored drugs mailed from Canadian Internet pharmacies.
More recently, however, storefronts have blossomed to help U.S. residents use the Internet to order drugs from Canada. And the FDA and local health officials have taken actions against the shops, including sending warning letters.
Those storefronts are one reason Jupiter Research estimates the Canadian Internet drug market will double to $1.4 billion this year. The firm said the $700 million worth of drugs purchased through Canadian Internet pharmacies last year represents a lost market opportunity for drug companies of $1.3 billion, or about 1% of the U.S. retail pharmaceutical market.
Jupiter analyst Monique Levy said cutting off drug supply to Canada is the most efficient way to stop the Internet business from expanding.
"It is much quicker than getting the FDA involved. Much more direct," Levy said.
Meanwhile, Canadian internet pharmacy executives maintain it is ridiculous to say they are hurting drug companies profits.
"If people weren't buying from me, they wouldn't be buying," said Dave Robertson, president of crossborderpharmacy.com.
Robertson said his orders of AstraZeneca drugs have been curtailed by wholesalers but that purchasing Glaxo medicines has become much more difficult, with deliveries to U.S. customers as much as three weeks behind schedule.
If other drug companies follow Glaxo and AstraZeneca, Robertson fears he may go out of business.
"These drug companies are giants," Robertson said. "They have way more resources than me."