Lilly moves to curb reimport of drugs
The Indianapolis Star, January 14, 2003
Eli Lilly and Co. has warned Canadian drug wholesalers by letter that they are breaking their contracts with Lilly by supplying pharmacies that reimport Lilly drugs into the United States.
Unlike other drug firms, however, Lilly stops short of threatening to cut off sales to Canadian wholesalers who don't heed Lilly's warning.
"We just didn't go that far" to threaten a cutoff in sales, Lilly spokesman Ed Sagebiel said Monday. "The letter raised our concern about safety issues, letting them know they are violating their contract with us and with U.S. law."
The Indianapolis drugmaker mailed the warning through its Toronto-based Canadian affiliate in mid-December, Sagebiel said.
The letter says Lilly will request that wholesalers show Lilly their records of who buys their Lilly drugs.
Lilly joins other major drug firms that have warned Canadian wholesalers or pharmacies about the growing business of reselling prescription drugs to Americans at prices cheaper than they can be bought in the United States.
The world's second-largest drug company, Britain's GlaxoSmithKline, has threatened to halt shipments to Canadian pharmacies and wholesalers on Jan. 21 unless they stop selling drugs bound for U.S. patients.
Canada's drug price-fixing laws, with government-set limits on drug prices, allow Canadian pharmacies or wholesalers to offer lower-priced products to Americans through mail-order sales.
Some Canadian pharmacies cater primarily to U.S. customers, and the cross-border shipments have boomed in the past year.
"Growing steadily is an understatement. It's growing by leaps and bounds on a daily basis," said Victor Z. Janus, vice president of Aptecha Inc., a seven-month-old mail-order pharmacy near Winnipeg, Manitoba, that caters to U.S. buyers.
Janus said Aptecha ships to about 5,000 people, often dramatically undercutting the prices at which Americans can buy some popular drugs.
Janus said Aptecha's owners are concerned about the warnings from Lilly, Glaxo and other drugmakers, but have continued to ship their products abroad.
To order, patients must mail or fax doctor-signed prescriptions, which typically are reviewed by Canadian doctors who work for the pharmacies.
"We are basically shipping to people falling through the cracks" in federal and private prescription drug plans, Janus said. "This is the only way they can afford to get their medicine."
The U.S. Medicare health plan for seniors doesn't include prescription drug coverage for non-hospital use.
Major drugmakers including Lilly have lobbied for an overhaul of the Medicare system that includes prescription drug coverage and believe that is a solution to the drug affordability problem, Sagebiel said.
Drugmakers also say shipping prescription drugs by mail from another country poses safety problems and raises the chances of counterfeiting.
"We are taking this action (to cut off sales) on behalf of patients and patient safety," said a spokeswoman for Glaxo, Mary Anne Rhyne.
It is not clear how effective the industry threats will be.
Because pharmacies are free to buy from any of numerous wholesalers, a drugmaker wishing to cut off sales to even one pharmacy would almost have to exit the Canadian market entirely to make its threat stick.
That would bring an uproar from Canadians who use the company's drugs legally and possibly prompt Canadian government action.
Even so, the Canadian pharmaceutical market is tiny, at $7.7 billion in 2001, compared with more than $150 billion in the United States, according to the drug-tracking company IMS Health.
Lilly is less vulnerable to losing sales to Canadian pharmacies than many of its rivals who sell more brand-name products geared to older Americans.
Lilly's antidepressant Prozac was heavily used among seniors, but it went off-patent in 2001. Another Lilly product with broad use by seniors, insulin, is a liquid that's difficult to ship by mail.