AUGUSTA, Maine (Wall Street Journal) — The hunt for cheaper prescription drugs long has led consumers to reach beyond U.S. borders, but under a Maine law set to take effect Wednesday, their search now will have the state’s blessing.
The law, the first of its kind, sanctions the direct purchase of mail-order drugs from some foreign pharmacies. It has ignited a court battle with the pharmaceutical industry and set the stage for a broader fight over access to less-costly medication.
“If Maine can do this, other states will do this. It could have a big impact on pharmaceutical companies’ long-term profits and desire to invent new medications,” said Boston University economics professor Laurence Kotlikoff, who researches drug imports. “On the other hand, in some areas, they [drug makers] need to be brought back in line.”
Drug makers argue in a lawsuit that the practice could expose residents to tainted or counterfeit medication, and that it interferes with U.S. Food and Drug Administration oversight. Supporters say the industry is worried about a hit to its bottom line. “It’s not a safety issue,” Republican Gov. Paul LePage said in an interview. “It’s turf.”
For years, some companies and municipalities in the Canadian border state have been setting up drug plans with foreign pharmacies. For Portland, the practice saved Maine’s largest city $3.2 million between 2004 and 2012 for employees’ drugs, Mayor Michael Brennan said. There were no safety issues, he said.
Using the broker CanaRx, Portland pays $200.90 for a 90-day supply of 40 mg tablets of the heartburn drug Nexium, and it waives any employee copay. For the same order as negotiated by Portland’s health insurer, Aetna Inc., AET -0.65% the city says it pays $621.08, with the employee contributing 25% of that, or $155.27.
More than a dozen states, including Illinois and Kansas, have explored importing medications at the urging of older residents, but a prescription-drug benefit added to Medicare in 2006 quieted the movement.
Americans generally pay more for drugs than residents of countries where the government imposes pricing caps or negotiates prices with drug makers.
The FDA prohibits importing medication by any means, but the agency rarely enforces the ban among consumers. An FDA spokesman, citing the federal government shutdown, said the agency was unable to comment.
One Maine company that already imports drugs is Hardwood Products Co., which makes wooden sticks used in frozen treats and corn dogs, and employs 440 people around the rural community of Guilford. Access to international pharmacies cuts its annual health-care costs up to $600,000, company officials said.
Without the benefit, they said, copays can run hundreds of dollars a year each for factory workers. “I can afford to do that. But many of our employees cannot, and that really hurts,” said general manager Terry Young.
Local pharmacists grew alarmed in 2012 after the Maine State Employees Association, which represents thousands of workers, contracted with CanaRx, said Kenneth McCall, head of the Maine Pharmacy Association. He said the contract would have hurt the pharmacies’ revenue, but also was concerning because CanaRx wasn’t subject to Maine’s oversight. In response, then-Attorney General William Schneider halted drug-importation programs last year by all employers, saying they violated state law.
CanaRx was issued two FDA warning letters in 2003. Chief Executive G. Anthony Howard said the issue concerned a shipment of insulin, which needs to be kept at a certain temperature range, that wasn’t delivered in a timely way. The company since has stopped shipping temperature-sensitive drugs, he said. “We’re very proud of our safety record and we’ll stand behind our products 110%,” he said.
In June, Maine legislators stepped in, removing the state licensing requirement for accredited pharmacies in Canada, the U.K., New Zealand and Australia. Major drug companies, including Pfizer Inc., PFE +0.18% Eli Lilly LLY -0.19% & Co. and Johnson & Johnson JNJ +0.41% , as well as retail drug chain Rite RAD -3.40% Aid Corp., opposed the move. A Pfizer spokesman said drug imports raise “serious safety concerns,” because tracking them for safe handling or validity is difficult.
The law triggered a challenge in U.S. District Court in Portland from Maine pharmacy groups and the Pharmaceutical Research and Manufacturers of America, the first lawsuit from the drug-industry trade group against a state over drug importation.
Pharmacists want the court to clarify that drug importation is illegal, said Joe Bruno, CEO of Community Pharmacies, a Maine chain. He said they have been disappointed in the response from the FDA, which in a recent letter indicated it would concentrate its efforts on educating the public about the potential hazards of imported drugs.
“We wanted the FDA to step in and say it’s against the [Maine] law, but they kind of did a little soft-shoeing around it,” he said.
Maine officials say they are confident residents are getting legitimate medication through well-regulated supply chains. But some Canadian pharmacies have outsourced prescriptions from Americans to operations in Turkey and India, said John Horton, president of Portland-based LegitScript LLC, which vets online pharmacies and works with the FDA and Google Inc. GOOG +0.26% to identify rogue operators. Some drugs ultimately were found to be misbranded or counterfeit, he said.
Americans have crossed the Canadian border for prescription drugs since the 1950s and would have stopped if the drugs were unsafe, said Tim Smith, a general manager at the Canadian International Pharmacy Association, which represents drugstores that ship to Americans.