Canadian drugs: The inside story

As an advisor to many southeastern Wisconsin businesses on their health benefits plans, we know our clients are struggling under the burden of increasing health care costs. We advise our clients to implement a strategic, managed, sustained process over three years to examine all elements of their health care benefits and proactively seek ways to harness these costs.
The costs of prescription drugs show promise of relief through potential changes to the federal law that now prevents the re-importation of Canadian drugs.
Increasingly, companies are confronted with a rapidly changing landscape when it comes to drug costs. Benefit managers will tell you that drug costs can consume up to 20 percent of health care benefit dollars. Your benefits manager is also likely to get questions from employees wondering why your prescription drug program requires purchase of drugs from U.S. pharmacies when the same drugs are often less than half that cost via Canadian mail-order pharmacies.
First a little background. It is currently illegal to re-import American drugs that are sold at much lower prices through Canadian pharmacies. The difference in prices between American and Canadian pharmacies is hard to account for, but it is strongly influenced by several factors.
The Canadian government regulates the prices at which drugs may be sold. The FDA’s strict regulations and the high level of advertising in the United States also may contribute to the cost differential. In the end, several commonly used drugs are sold for vastly different prices in the United States and Canada (see accompanying chart).
As health care costs, especially drug costs, have increasingly burdened consumers, several states have become involved, including Wisconsin. The State of Wisconsin was the second state to set up a Web site to help individuals safely obtain lower-priced drugs
from Canada. At its Web site, www.drugsavinds.wi.gov, the Doyle administration directly addresses the legality of importing these drugs.
The Wisconsin site says, "The U.S. Food and Drug Administration has implemented a personal use re-importation policy that results in enforcement discretion on the re-importation of drugs from Canada. It is the federal government’s position that applicable federal law currently prohibits such re-importation."
While providing this warning, the site also provides guidance on how to safely import these drugs. One could therefore conclude that individuals should import Canadian drugs at their own risk, and that authorities are not aggressively enforcing this law.
Our firm believes it is premature to condone or endorse Canadian prescription re-importation at this point. However, we believe our clients and businesses in southeastern Wisconsin need to be well-informed regarding the potential change in the law. Indeed, Health and Human Services Secretary Tommy Thompson has recommended that the Bush Administration "not stand in the way of a bill to make Canadian drugs legal."
At the request of one of our clients in southeastern Wisconsin, we recently began exploring safe and cost-effective ways to tap into lower priced Canadian Drug re-importation. In addition to inviting an expert from a Canadian Pharmacy Benefits Manager (PMB) to speak one-on-one with our clients, we recently completed a visit with a United States PBM that is capable of accessing FDA approved drugs from Canadian sources.
Here is what we’ve learned:
1. Process
Some are concerned about how a Canadian pharmacy can fill a prescription from a US doctor. We found there to be a logical process in place to assure the appropriate prescriptions are being dispensed.
Here is how the process works with one re-importation program offered through Canusa Health: A patient or doctor submits a prescription to their PBM, and a patient file is created. The file includes standard medical information on the patient, as well as physician information, medical history and any patient allergies. After reviewing the patient’s information, the pharmacist performs a Drug Utilization Review (DUR) and considers any anomalies with the prescription. Should there be any questions, the pharmacist is required to contact the physician and make any necessary changes. The prescription is then forwarded to a Canadian pharmacy for filling and shipping. The Canadian pharmacy also has all of the patient records. A Canadian doctor performs an additional DUR. If he concurs, he forwards the script to the Canadian
pharmacy, where a third DUR is performed.
Canusa Health also has implemented another mandate that should add an additional element of safety. A person must first purchase the drug from U.S. sources for a minimum of 90 days before a Canadian drug will be offered.
2. Safety
We visited a Canadian mail-order facility that was part of a Canadian Pharmacy Network. This state-of-the-art facility fills 2,400 scripts per day using an automated, robotic system accommodating 15 languages. This facility is currently supplying schools, prisons, clinics and nursing homes. Most of the physicians who review prescriptions have dual licenses in the United States and Canada, and the program complies with confidentiality laws similar to those in America.
We concluded that our clients could work effectively with reputable pharmacies in Canada. The drugs are the same, although some, like Zocor, are produced in different colors and shapes.
3. Municipalities and government entities will lead the way.
One municipality in Massachusetts is soon to implement the first prescription benefits program for their workers using a Canadian Benefits manager. Struggling under tight budgets, we believe more municipalities will be out in front on this issue, leading the way for businesses to follow.
We have no way of knowing how soon the laws on Canadian drug re-importation might change. Our clients are mainly municipalities and businesses with 50 to 500 employees. As they confront health care spending that is higher than other metropolitan areas – as much as 27 percent higher, according to a recently released General Accounting Office study – drug benefit savings would provide welcome relief.
Daniel E. Burkwald is president of Burkwald & Associates Inc., a Pewaukee based consultant providing expertise in employee benefits, retirement plans, executive fringe benefits and business succession planning. He can be reached at (262) 523-3100.
September 17, 2004, Small Business Times, Milwaukee, WI