Drug Companies Crack Down on Canadian Internet Pharmacies


WINNIPEG, Manitoba, Feb. 7, 2005 — -- Trying to circumvent soaring prescription drug prices in the United States, an estimated 2 million Americans buy their medications from Internet pharmacies in Canada, which employs government price controls. Some major pharmaceutical companies are now aggressively trying to stop the cross-border sales.

The biggest pharmacy in all of Canada -- where many of the Internet pharmacies are based -- does not sell one pill to a Canadian.

"Our clientele is 100 percent American and we dispense over 3,000 prescriptions per day," said Bob Fraser, lead pharmacist for the Web site CanadaDrugs.com.

At least 80 Internet pharmacies in Canada cater to Americans -- selling Fosomax for osteoporosis, Paxil and Effexor for depression, Nexium for heartburn, Lipitor for high cholesterol -- all for 30 percent to 40 percent cheaper than U.S. prices.

What started out five years ago with one Canadian pharmacist selling Nicorette gum to Americans via the online auction site eBay has turned into an $800 million-a-year business.

That business is threatening the drug industry's profits in the United States, and several drug makers are now blacklisting the online pharmacies.

Pharmaceutical companies including Pfizer, Wyeth and Eli Lilly have all cut off supplies to any Internet pharmacy selling drugs to Americans.

Documents obtained by ABC News show how Merck's Canadian subsidiary -- Merck Frosst -- approached drug wholesalers that supply the Internet pharmacies. The company demanded " a written statement that you have not sold and will not sell Merck Frosst's drug products to entities which are selling, or enabling for sale, such products into the United States," according to one document.

"I believe it is to drive us out of business because it is a complete cutoff," said Dave MacKay, chief executive of the Canadian International Pharmacy Association.

Merck executives declined to be interviewed, but suggested in a written statement "patient safety" was their concern.

"There should be no need for patients to put themselves at risk by purchasing potentially counterfeit medicines over the Internet," the statement said.

Canadian pharmacists say they sell the same drugs made by the same companies as those sold in the United States.

"We get them from the exact same manufacturer, and we dispense them in the original container with the American seal on the container," said Fraser.

The industry pressure has increased Canadian prices by about 10 percent for some drugs, but they are still sold well below U.S. prices.

To fill prescriptions, Internet pharmacies must now buy their drugs secretly from traditional retail drug stores in Canada or elsewhere.

"In direct consequence to the blacklist we have moved overseas," said Jeff Uhl, founder of the Internet pharmacy UniversalDrugStore.com. "We have opened our own pharmacy in the U.K."

By cutting off cheaper drugs from Canada, drug companies are encouraging Americans to fill their prescriptions in other foreign countries, thus increasing safety questions and creating the very problem they say they are trying to avoid.

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