HHS Task Force on Drug Importation

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United States of America
Health ond Human Services
Importation Task Force
Stakeholder Meeting

Friday, May 14, 2004

The Task Force met in Conference Rooms D and E in the Parklawn Building, 5600 Fishers Lane, Rockville, Maryland, at 1:00 p.m., VADM Richard Carmona, Chairman, presiding.

MS. KAREN COLLISHAW, Associate Executive Vice President of the American College of Cardiology (representing the Alliance of Specialty Medicine)

MS. SUSAN HILDEBRANDT, Assistant Director of Government Relations, American Academy of Family Physicians

DR. CAROLE JENNINGS, Legislative Liaison, American Academy of Nurse Practitioners

MR. CARMEN CATIZONE, Executive Director/Secretary, National Association of Boards of Pharmacy

MS. SUSAN WINCKLER, Vice President, Policy and Communications, Staff Counsel, American Pharmacists Association

MR. DOUGLAS SCHECKELHOFF, Director, Section of Pharmacy Practice Managers and Director, Pharmacy Practice Sections, American Society of Health-System Pharmacists

DR. MARV SHEPHERD, Director, Center for Pharmacoeconomic Studies, College of Pharmacy, The University of Texas at Austin (representing the Academy of Managed Care Pharmacy)

MR. ROBERT McNELLIS, Director, Clinical Affairs and Education, American Academy of Physician Assistants

MR. DONALD MacARTHUR, Secretary General, The European Association of Euro-Pharmaceutical Companies

MR. DAVID McKAY, Executive Director, Canadian International Pharmacy Association

Ms. Karen Collishaw, Associate Executive Vice President of the American College of Cardiology (representing The Alliance of Specialty Medicine)

Ms. Susan Hildebrandt, Assistant Director of Government Relations, American Academy of Family Physicians

Dr. Carole Jennings, Legislative Liaison, American Academy of Nurse Practitioners

Mr. Carmen Catizone, Executive Director/ Secretary, National Association of Boards of Pharmacy

Ms. Susan Winckler, Vice President, Policy and Communications, Staff Counsel, American Pharmacists Association

Mr. Douglas Scheckelhoff, Director, Section of Pharmacy Practice Managers and Director, Pharmacy Practice Sections, American Society of Health-System Pharmacists

Dr. Marv Shepherd, Director, Center for Pharmacoeconomic Studies, College of Pharmacy, The University of Texas at Austin (representing the Academy of Managed Care Pharmacy)

Mr. Robert McNellis, Director, Clinical Affairs and Education, American Academy of Physician Assistants

Mr. Donald MacArthur, Secretary General, The European Association of Euro-Pharmaceutical Companies

Mr. David Mackay, Executive Director, Canadian International Pharmacy Association

SURGEON GENERAL CARMONA: Good afternoon, ladies and gentlemen. Thank you for being with us again for this Task Force Meeting on Drug Importation. We were stalling a couple of minutes to see if the other Panel Members would come, so we'd have a full Panel when we begin, but we don't want to inconvenience anybody that's here already, so we'll get started and work in the other Panel Members as they arrive.

I'd ask the speakers to please be cognizant of the clock. Again, we've requested that you keep your remarks to five minutes or less and we'll just go in succession across the table to all of the speakers and then the Task Force Members will be able to ask you questions at that point.

Otherwise, we'll conduct the meeting as we have the previous meetings, so there will be no changes.

Once again, thank you all for being with us, so Dr. Maxey is not here, so why don't we go ahead with Dr. Rebecca Patchin from the American Medical Association.

DR. PATCHIN: Thank you, Dr. Carmona. My name is Rebecca Patchin. I am an anesthesiologist, a practicing pain management specialist and a member of the American Medical Association's Board of Trustees.

I'm in solo practice in Riverside, California where I've had a number of patients cross the border into Mexico to attempt to buy more cheaply the prescription medication that I have prescribed for them.

Am I concerned about this? Absolutely. In fact, this is a concern shared by the AMA and practicing physicians across the U.S. We are concerned because when patients go outside of this country to purchase their drugs, there is no way for physicians to be certain that the drugs they prescribe for them are the drugs they are going to receive. Whenever patients get their prescription drugs from Mexico, Canada or the European Union, the concerns remain the same, that our patients are getting the right drug, the right dose, and in the right way.

What the right way means is that the drugs come from manufacturers, wholesalers, retailers, whether internet or brick and mortar pharmacies; that it can assure quality while at the same time balancing against the needs for patients to get their prescriptions at the lowest possible price. But when it comes to drug importation, patient safety is the AMA's number one priority.

At its 2003 Annual House of Delegates Meeting, the AMA chose not to adopt a resolution supporting prescription drug importation. Concerns over patient safety were at the center of AMA's debate. On the legislative front, the AMA also opposed H.R. 2427, the Pharmaceutical Market Access Act of 2003, primarily because the bill lacked a provision that required the Secretary of HHS to certify the safety of imported drugs.

The only way to assure the safety of imported drugs is to make certain that all drugs for sale for patients in the U.S. are FDA approved. That means, among other requirements, that the drug has been approved by the FDA for safety and efficacy, that the drug manufacturer has met all U.S. laws and regulations for good manufacturing practices, that the FDA has the authority to inspect all manufacturing facilities, that the drug has met all FDA labeling and packaging requirements, and finally, that the drug's chain of custody can be assured and traced.

Admittedly, these requirements would demand significant federal resources, but if we are to allow drug importation, these measures are necessary to protect the American people and to preserve our stringent and very effective approval process.

Another AMA concern is drug counterfeiting. In a recent FDA report, drug counterfeiting outside the U.S. was described as widespread and affecting the drug supply of both developing and developed countries. In some instances, counterfeit drugs accounted for more than half of a country's drug supply.

The AMA has concerns that if prescription drugs are allowed to be imported from foreign countries, counterfeit drugs will more likely enter our system, a system that is now well protected for its drug distribution. If we allow importation, the distribution system must be closed and all drugs must be subject to reliable, electronic track and trace methodology to secure the integrity of our drug supply chain and to prevent the importation of counterfeit drugs.

The AMA is also concerned with whether or not individual patients will be allowed to import drugs directly via the internet. This is largely an unregulated area with an increasing number of rogue websites already selling prescription drugs of unknown quality and often without a valid prescription. The problem is likely to increase, if direct importation by patients is legalized.

Without the safeguards I have described, the American people cannot be certain that the imported drugs they are taking are safe, effective and of high quality. These may seem like high standards to demand, especially when many patients struggle to pay the high cost of their prescription drugs. However, if we permit unsafe, ineffective, adulterated, misbranded, expired or counterfeit drugs to reach our patients, it may result in patient harm, even death.

To use an example from my field of pain management, if a subpotent or counterfeit drug means the difference between a scale of 6 on a 1 to 10 scale, and a scale of 9, I'm sure you can appreciate the difference that would be to you, if you were in that severe pain.

These and other patient safety issues must be weighed carefully before any decision should be made on drug importation.

Thank you for the opportunity to address you. I'll be happy to answer your questions.

SURGEON GENERAL CARMONA: Thanks very much. Our next speaker, Ms. Karen Collishaw.

MS. COLLISHAW: Thank you, Dr. Carmona. Thank you for offering health care providers the opportunity to comment on the important public policy issue of prescription drug importation.

My name is Karen Collishaw and I am the Division Vice President for Science and Advocacy at the American College of Cardiology. I am here today representing the Alliance of Specialty Medicine. Founded in 2001, the Alliance brings together 14 medical specialty societies representing over 200,000 physicians throughout the U.S. The Alliance is dedicated to being a strong voice for specialty medicine and the patients who need access to specialty care.

The escalating cost of many prescription drugs affects the most vulnerable patients, the elderly, the uninsured, and those with chronic health conditions. As is widely known, these patients often present with advanced and co-morbid conditions leading to complex decision making for physicians. Unfortunately, this decision making process must include consideration of whether the patient can afford the most appropriate drug or in many cases multiple drugs for treatment. The effectiveness of any disease management regimen will be seriously reduced if a patient skips doses to stretch medication or is forced to make the difficult decision not to fill a prescription because of a lack of financial resources.

The Alliance is most concerned that our nation's prescription drug importation policy be designed to provide a safe and reliable source of these medications for patients. There are undoubtedly many safety and procedural issues associated with prescription drug importation that must be addressed by the FDA and other relevant agencies.

The Alliance supports the necessary authority and funding for these agencies to design and implement a monitoring system with controls to ensure the safety of imported drugs consistent with the provisions of current law. Specifically, the safeguards in any and all importation policies must ensure that prescription drugs brought into our country are safe and effective for their intended use.

As you know, there are always opportunities for prescription errors, whether in the United States or any other country. No system can be guaranteed 100 percent effective and sanitized against human error. However, the protections specified under current law on this subject, in addition to innovation such as bar coding and tamper resistant packaging should help reduce the risks to patients for drug importation.

The Alliance recognizes that prescription drug importation is not the solution to address all problems that patients have with access to care. However, the Alliance believes that importation of prescription drugs, done safely, may be in the step in the direction of reducing cost barriers and providing much needed financial relief for patients.

I'm Susan Hildebrandt and I'm Assistant Director of the Division of Government Relations with the American Academy of Family Physicians. I've an extremely brief statement because perhaps like many of the groups, we are just beginning to look at this issue more thoroughly and we have really decided to look at the issue of drug importation really through the prism of drug coverage.

Frankly, we looked at this for the first time only about a year ago in May of 2003 and came up with a recommendation. The key points in this recommendation were as follows: first, the Academy believes that the re-importation or importation of pharmaceutical drugs from Canada and other countries is really symptomatic of a larger problem, namely, the lack of affordable prescription drugs. Secondly, prescription drug costs and the lack of coverage really limits their availability in the United States. And thirdly, the Academy really believes that Congress should address this issue and make sure that these drugs are available to patients at affordable prices.

Parenthetically, the Academy also believes that other issues such as internet drug -- the people getting drugs through the internet is also part of this larger high cost problem.

Next week, our Academy's Commission on Legislation is going to be looking at this issue again and I don't know if our policy will be revised, but we are certainly looking at the two most recent pieces of legislation in Congress, namely, the bipartisan bill that was recently introduced and then the bill that was introduced by the Senate Finance Committee Chairman Grassley and at that point we may revise these comments. But at this point, I appreciate the Academy's, you allow the Academy to present this statement. Thanks.

DR. JENNINGS: Dr. Carmona, it's good to see you again. I think you started your professional life in health care as a nurse.

DR. JENNINGS: So it is nice to be here. I am representing the American Academy of Nurse Practitioners. We represent over 97,000 advanced practice nurse practitioners throughout the U.S. and we're very acutely aware of the high cost of prescription drugs.

As primary care clinicians who prescribe medications for their patients on a regular basis, nurse practitioners are reminded daily of the negative impact those costs have on the health of their patients. Patients often do not fill their prescriptions or partially fill prescriptions because their cost of prohibited or they may take a medication that is prescribed daily two or three times a week. They often make the medication last longer or they take medication temporarily until the next paycheck or pension check is available. The result is poor management of illnesses, poor quality of life and increased need for hospitalizations and emergency room care.

The inability of patients to pay for prescription drugs actually increases the cost of medical care and the cost of chronic disease management which we know is now a very big priority with the Medicare Program.

When medications cannot be taken as directed, the risk for increased hospitalization and ER visits multiplies. It is in the best interests of the American public that affordable ways to obtain medication be developed.

And we have three principles or areas that we are particularly concerned about. The first is safety, as my colleagues have also mentioned. If drugs are to be imported, it's important to know that they are safe, that they don't have variable doses from tablet to tablet or capsule to capsule and that their composition consist of the correct therapeutic ingredients.

Consumer friendly. If drugs are to be imported, it should be done so that patients can have access in a timely and uncomplicated manner. If too many restrictions are placed on patients so that it becomes impossible to obtain drugs more cost effectively through this mechanism, then the purpose for drug importation is lost.

The last one, limiting access to provider groups. If the implementation consists of identifying providers who can prescribe these drugs that have been brought over from Canada, we just ask that you include nurse practitioners because like our primary physician counterparts, it is a huge problem for us and for our patients.

So in conclusion, nurse practitioners remain acutely aware of the burden high cost prescription drugs places on patients and providers. The Academy believes that steps do need to be taken to reduce the financial burden of these high cost prescription drugs. We are so delighted that you asked us to participate. We look forward to working with you as you implement the Medicare prescription drug legislation.

SURGEON GENERAL CARMONA: Thank you very much. I think what we'll do now is Dr. Maxey has not arrived yet, oh, there he is. I'm sorry. Perfect timing. Dr. Maxey, right on cue. Right there, sir. Thank you for joining us.

SURGEON GENERAL CARMONA: Dr. Maxey is from the National Medical Association and the floor is yours, sir.

Good afternoon, Surgeon General Carmona and Members of the Secretary's Task Force on Drug, Food and Drug Importation. The National Medical Association, the conscience of American medicine is America's premiere membership association of physicians of African descent. As such, the NMA represents over 25,000 medical practitioners and the patients they serve. Many of our patients are from underrepresented and underserved minority groups and are therefore representative of the most vulnerable populations seeking services from our nation's health care system. These populations are also the victims of disparities in health care based upon race and ethnicity in their every day lives and communities across our nation.

Consequently, the outcomes of this inquiry process relating to drug re-importation is directly relevant to the practice of medicine for African Americans, in particular, and for the U.S. population as a whole. We are appreciative, therefore, for this forum and we thank the Health and Human Services Task Force on Drug Importation for inviting us to participate. We're hopeful that our input, in addition to the input of all the other stakeholders will bring us to a viable commonsense strategy for dealing with this thorny issue.

Fundamentally, the NMA, the National Medical Association, is of the opinion that the quality and safety of the drugs to be imported must be our paramount concern. If any doctor or physician in America writes a prescription for a patient and cannot be confident that the prescription will be correctly filled, then the patient may as well have written the prescription. It stands to reason then that the Food and Drug Administration's role in this process will be critical.

To this end, the following recommendations are been proffered by the NMA in response to the specific solicitation from the Task Force. We have listed our responses in sequential order.

The first question, to assess the scope, volume and safety of unapproved drugs including controlled substances entering the United States via mail shipment. The FDA should concern itself with determining which countries of the world have equivalent regulatory and approval processes for bringing pharmaceuticals to market. There is also a need for determining the safety of said pharmaceuticals if they are to be imported into the U.S. If the drugs are safely produced, we need to be certain that they are safely shipped as well. The FDA could develop standard protocols that can be enforced at our nation's ports of entry. These protocols could be signed affidavits from the issuing pharmacist that demonstrates that the products being inspected meet U.S. quality and safety standards and therefore merit allowance into the U.S. The burden of proof could then be placed on the individual or individuals seeking to do the importing, thus minimizing the administrative/regulatory burden placed upon the resources of the FDA.

Volume requirements should be reasonable. If an individual U.S. citizen or resident attempts to bring drugs into the U.S., it should be up to them to demonstrate that the products are only for a specified period to treat a specific condition. This information may be included as a line item on the aforementioned affidavit which should also be signed by the intended user or designee.

If the affidavit is bar coded, it could be tracked for data collection and for enforcement purposes if any questions of legality later arise. Any attempt to mislead the U.S. government in this process should be treated as a felony with the appropriate penalties. Commercial shippers and mail carriers should be required to ask if packages contain prescription drugs and if so, require that customers present the aforementioned affidavits.

The second question: to assess pharmaceutical distribution chain and the need for and feasibility of modifications in order to assure the safety of imported products. If a prescription drug shipment goes through an intermediary before it gets to the intended consumer, then the intermediary should also be required to certify that the shipment is delivered to the intended recipient in the safest and timeliest possible fashion. This would include relevant information such as meeting refrigeration and packaging requirements, for example. This certification should be numerically linked to the aforementioned affidavit, probably as an addendum or Part B of the document. Intermediaries of the supply chain should be restricted to certain categories of persons. It is possibly safest if each category of intermediaries has a pharmacist designated for this purpose in order to improve the probability, the integrity of the product is maintained pending delivery to the customer.

The third question. To determine the extent to which foreign health agencies are willing and able to ensure the safety of drugs being imported from their countries to the U.S. This determination requires a collaboration of other U.S. government entities such as the Department of Commerce. To the extent that international trade agreements affect these arrangements, the FDA should be given the prerogative in setting the pharmaceutical requirements necessary to protect the interest of the American consumer. The protocols of foreign health agencies with regarding to exploiting their pharmaceuticals to the U.S. should be considered in light of what works best for our nation's taxpayers.

Fourth, to identify the limitations including limitations on resources and current legal authorities that may inhibit the Secretary's ability to certify the safety of imported drugs. The NMA has no specific input on this question at this time. But the current relationship between the FDA and the U.S. Customs is worth investigating. It is probably worth the time and resources necessary to develop compatible documentation mechanisms for these two entities for the purpose of regulating drug importation.

Fifth, to estimate Agency resources including additional field personnel needed to adequately inspect the current amount of pharmaceuticals entering the country. The NMA has no specific comments on this question at this time.

Sixth, to identify ways in which importation could violate U.S. and international intellectual property and describe the additional legal protections and agency resources that would be needed to protect those rights. Foreign pharmacies should be prohibited from exploiting pharmaceuticals that do not pass U.S. safety and quality standards to the extent that the FDA can ensure compliance.

All American manufacturers should be held to the same standard, whether or not they manufacture generics. The NMA is strongly committed to the principle that the best therapy should be sought for each patient irrespective of whether the drug is generic or brand name or for that matter whether the patent was issued in the U.S. or elsewhere.

Seventh, to estimate the cost borne by entities within the distribution chain to utilize anti-counterfeiting technologies that may be required to provide import security. The NMA has no comments on this question.

Eighth, to assess the potential of short and long-term impacts on drug prices and prices for consumers associated with importing drugs from other countries. An HHS entity such as the Agency for Health Care Research and Quality or the National Center for Health Statistics should be definitively involved in answering this vital question. The findings would particularly be useful to the Centers for Medicare and Medicaid Services which, as we know, is America's most significant purchaser of pharmaceutical services. The population served by CMS happened to significantly overlap with NMA's key constituencies, so we would be very interested to answer this question if as a nation we decide we can successfully import safe, top quality drugs, then it means viable competition for America's drug manufacturers, and therefore greater bargaining powers for purchasers such as CMS. This should translate into lower out of pocket costs for the most vulnerable consumers who are currently forced to choose between medications and other essential goods and services. HHS should commission a study on this question as soon as possible.

DR. MAXEY: The pharmaceutical industry should -- we do need to collect data to find out the best ways to approach this and NMA would support any efforts to do the research that are required to make sure that our patient's receive the best quality medications regardless of their conditions, whether they're imported or not. Safety is the most important thing for the NMA.

SURGEON GENERAL CARMONA: Thank you, sir. At this time, I'd like to open the floor to questions from the Task Force Members.

DR. CRAWFORD: Yes. Thank you, Dr. Maxey, for your excellent testimony. We appreciate it very much.

You had talked about some safe harbors for importation of drugs. I have basically a two-part question. One is if, in fact, we go forward with legislation which I believe you mentioned indirectly, I assume you would hope that they would require, that is, if there's a new law, to make this legal, country of origin labeling and if so, how prominent would you like that to be?

You talk about FDA should determine what countries should be eligible to import or export to the United States under some new sort of scheme. Normally, where the product is manufactured, if it's a U.S. product which is all we have to deal with now is sort of list it in very small print.

We've had these debates in the food area and in other areas that FDA regulates and it becomes a very big sticking point as to whether or not you want to clearly identify, some color coding scheme or something like that.

DR. MAXEY: Yes. We do know that some countries are very sophisticated in terms of how they judge the quality of their drugs and we know that many of these drugs are manufactured by the same companies that manufacture here.

Where we do lose control, even in the United States, is when we get to our wholesalers and get to the people who distribute and we know even here we don't have total control over the quality there. So we do think that FDA standards, our high quality standards should be applied to some of the more sophisticated foreign countries and those should be probably the countries that we would limit where drugs would be imported from, if that's possible.

Clearly, there's some countries that are not up to snuff, where you couldn't certify anything and I think those would have to be a long time in coming. So we're concerned with the safety of drugs we have now because we know once they leave the manufacturer, get to the wholesaler and distributer, we lose all control. But to the extent that we can put controls in there, as well as in the more sophisticated foreign countries, then we are for bringing in things that can approach the treatment of our patients at a price they can afford.

DR. CRAWFORD: The next thing generally this takes us to is if, in fact, FDA or some other entity certifies that another country has the same kinds of standards, equivalent standards, would you countenance or what would be your opinion about some sort of labeling system which would say not FDA approved, let's say approved in Canada, for example. Or would you want some sort of formal declaration of FDA approval? See, we could do it a couple of ways and I'm not sure how to do it at this point. But these are some of the kinds of questions that your testimony engender in my mind.

DR. MAXEY: I don't claim to be an expert, but we do want to know that our FDA can have some sort of oversight of that process to the extent possible. Somewhat of what you asked is a legal question and there's a liability question so if you certify something that you don't have total control of, you don't want to take that liability either. But to the extent that we have control of our own system, we should try to have those countries that wish to cooperate with re-importation to have some standards that we can approve of. That's as far as I could really say and be safe.

MR. SACHDEV: This question is for Mr. Maxey and actually others, if they have comments, are free also to provide their input.

In all the discussions that we've had, your testimony was certainly the most complete and I appreciate the fact that you actually went through each of the questions that we are grappling with and try to provide us with information about those because in some cases, we've gotten testimony on certain questions, but not all of them. And I think that's very appreciated.

One thing that you mentioned right up front that I want to ask you about is the comment that you made about equivalence and the need for the FDA, if Congress considers legalization of importation, to assure that any imported drugs are equivalent to U.S. drugs.

Can you help us with how you would define equivalence? And in particular, some legislation that's pending has looked at that issue and said that some products can be like FDA products, but not necessarily the same as FDA products, differing in things like labeling, differing in terms of bioavailability and as we have thought about that issue and are trying to respond to the questions that Congress has given us, we struggled with trying to understand how much product exists outside of the United States that is truly the same as U.S. approved products or is, in fact, equivalent, but not quite the same as U.S. approved product.

Most of our major pharmaceutical firms are multi-national anyway and most scientists tend to be multi-national in terms of their training and their travels. So it shouldn't really be a hard reach to find bioequivalence and speaking the same language and find that.

We also, there's some differences even in generics and brand names in terms of bioequivalence whether it's Digoxin or other drugs that we know and bioequivalence is something that you determine in a laboratory of what meets what standard. And that should not be a hard scientific question to answer. It will require some real time testing of products. Just because something bears the same name and label, does not mean it has the same bioequiavlency. That's something that we would have to devise standards for that the scientists of each company would have to meet approval of their country, and of course, our FDA.

So that's not a hard question. Bioequivalence is something you determine by actual testing.

MR. SACHDEV: And what you're suggesting then is that you would be interested in seeing an importation scheme, if Congress put one in place, that had basically drugs that were meeting the same standards that are in the United States?

DR. MAXEY: Absolutely. Are labeled appropriately, just so you know what you're getting if you're going to take an aspirin from here and one comes from England, you should know that one is half the equivalent of the other or something. That doesn't seem like a very hard technical challenge. Most of our companies work every place in the world. They produce drugs here. They produce drugs in Africa. They produce them in Europe and so there shouldn't be really a problem if the same companies are dealing with these drugs.

MR. SACHDEV: Another one of the questions that we're grappling with has to do with the extent to which there are certain categories of products, either by virtue of their -- the way they're manufactured, the way they have to be handled and stored, the types of doctor-patient or medical professional-patient interaction that's required when they're prescribed. And in fact, in some cases, the type of labeling that's on them, there are a lot of these products out there that vary tremendously.

And the question for us is in thinking about importation, how do we address the fact that you have these various types of products, which have differing risk profiles? And in the context of importation, are there certain categories of products that the witnesses today believe simply aren't appropriate for importation because of particular characteristics? Or would pose more risk if, in fact, Congress were to legalize importation because of the characteristics?

DR. MAXEY: Just to -- one answer is there are certain drugs and I don't know the cost of them, but the Coumadin or warfarin type drugs can be somewhat lethal if you didn't have some standardization of these drugs, they could cause bleeding. But simply by testing such things as LD-50 and having the appropriate protocols should again avoid that. So we would want to know the appropriate testing for equivalence has gone on.

The one concern I do have is that many of our drugs, even here in the United States, have not been appropriately clinically tested on a broad range of ethnic people. Many African Americans, for example, have not undergone clinical trials for some of the ace inhibitors. That leads to some problems. So if we're going to bring in drugs from other countries, again, we would want to know that appropriate testing among ethnic groups and cultural groups has been done so that we really know the appropriateness of these drugs. So that is something we have as a problem right here, right now, with our own medication. So that's going to be compounded when you're bringing in drugs from outside. So that should also be considered that the appropriate database has been obtained so that they apply to all people that they're intended for.

DR. PATCHIN: I think speaking for the AMA, we would view the FDA process as the gold standard and one that we would want to have our patients and our physicians have confidence in wherever the drugs came from.

MR. SACHDEV: Are there particular products like controlled substances or biologics or injectables that you know, that folks think are probably of greater concern than other products, maybe fixed dose type products?

MS. COLLISHAW: We haven't talked about that, but it strikes me individually as reasonable that there would be probably be certain things that people would be uncomfortable with coming from outside the country.

DR. RAUB: I had a question for all of the members of the Panel that builds on the last several, but it begins with my stating the obvious, that is, the dilemma for this Task Force is that our citizens can look across the border to Canada or across the ocean to the U.K. and see people able to acquire safe and effective medications, and at least for some of the non-generic varieties at a substantial reduction in price.

If we were able to create a mechanism whereby drugs approved by those national authorities for distribution within their own countries could, in fact, be brought here through a certified distribution mechanism, and made available in our distribution system and then to our pharmacies, what would be wrong with that?

DR. PATCHIN: I'll start with that. Again, if they meet our FDA standard and they meet all of the items I said in my prior testimony, I think that we have a trial under way of that very subject of the cost to pharmaceuticals in this country and it was released about a week and a half ago when the Medicare website went up that compared the cost of pharmaceuticals. I think we've done a service to our elderly and as someone not eligible for Medicare, I too, have benefited by the cost comparison that has been obtained by looking at that website. When we get the drug cards and we get the ability to negotiate prices in this country, we may see that market forces affect the cost of pharmaceuticals in this country, but whatever we bring in, we need to make sure it meets our existing standards so that patients can understand that it is safe and that the physicians can know that it is safe when they write that prescription.

DR. MAXEY: From the National Medical Association, one, we're going to pretty much ditto what the American Medical Association says with the proviso that even though we have very safe drugs, many of my patients can't buy them, can't afford them and that's a major problem. If you have the safest, best thing in the world, but you can't get it, it's of no consequence. So it's very important to us that we solve this dilemma by having both safety, but also availability.

DR. RAUB: But the mechanism I was describing would bring drugs, safe and effective, for Canadians --

MS. COLLISHAW: If you have a system for certifying that they're safe and effective, it's hard to argue with that, right.

I have one for all of you. You have spoken all eloquently about safety, about cost, about quality. We've heard testimony earlier, if we're looking at importation as an option that those who have expertise in the safety aspects, all of the technology that's available today and we posed a question to them in hypothetical, assuming that cost is not an issue, do we have the technology available today to be able to ensure the safety of importation of all drugs and the testimony we heard was that the technology wasn't there.

So what do we do in that case if we're looking at importation as an option and the experts who deal in this field tell us probably can't do it, at least for a few years. We don't have the technology, not only to look at the bulk packaging which is similar, but when we get down to the repackaging as you said, Dr. Maxey and the distribution and warehouses and the breakdown and repackaging and getting down to every single pill or every single ounce of medication, how do we ensure that that's safe? Then what do we do? What are our options then?

DR. MAXEY: Well, I understand that we have a very safe situation, but we know that it's not safe down to the pill, as I've said before. So we can get as close to what we have now with the effort to make it as perfect as possible. I think that's the best we can do. We have to err somewhere between a perfect system that nobody can afford and an imperfect system where you have death and destruction. So we do have to get these drugs to people. So I think we have to make best efforts to develop that technology.

We do have the knowledge and we know how to certify those, but we have to have the will to do it, which does mean putting some of the finance and development into getting that system up and running.

DR. JENNINGS: I haven't heard anybody talk about the process that the Canadians go through to assure the safety of their medications, but I think it would be important that we just don't reinvent the wheel, that they may have a very good process. I've heard patients and colleagues in Canada feel that they have a very successful prescription drug system and I would somebody suggested that maybe the FDA should be involved with doing research on what the regulations and the mechanisms for patient safety and medications are, I guess at this point, you know, to start with, Canada. But I just don't think -- we're not the only ones who can assure that patients receive safe medications and I think other countries have done a good job in that area.

MR. SACHDEV: I'd like to follow up on that line of questioning. I think -- I'd like to get opinions from you all or thoughts. Concerns have been raised in the past in these listening sessions that follows on Dr. Carmona's question and it relates to the extent to which there is an effort to legalize importation. And we are able to address some of the safety concerns. We've had raised questions about -- and I know most of you are medical professionals, doctors, and so you have a special relationship with lawyers, but in particular, there's been questions about the extent to which there would be adequate legal recourse for patients who might be harmed by products that are imported into this country from overseas or from Canada or from anywhere where the U.S. regulatory entities including the federal Food and Drug Administration, but also the state pharmacy regulators do not currently have the ability to reach.

Do you have comments, any of you, on how that issue would need to be addressed or how it could be addressed or if you think it's a significant concern?

DR. PATCHIN: Well, we have 19 states in this country in crisis with medical liability. We have only five or six that are not on the tipping point to become one of the 19 that have been identified by the AMA. And anything that potentially would harm patients has potential to impact on the medical liability system.

I'd like to just share with you a personal story. Dr. Carmona practiced in what I call one of the other border states which I do, living in southern California, and I won't say which patient it was, but it is a patient that I see in a county hospital who pays for his own medications. And he had told me about his friend. And I don't know whether it was him or his friend who had gone to Mexico and purchased the prescription medication that I had written for him to fill in this country at a much lower cost. And he asked me if it was okay to take. And I went into I have no idea, you know. I don't know what the FDA does in that country. He says but it looks exactly the same. The bottle looks exactly the same. And I said well, I still don't know what is actually inside that pill.

The next month he came back in and told me that his friend had opened one of those pills and that his friend had found common dirt inside of the tablets, not any medication. And I said how did you know it was dirt? And he said my friend analyzed it. It was just dirt. And that is what we're dealing with, whether it be counterfeit meds from wherever they come, is whether that patient took that medication. Dirt probably wouldn't harm him, but if it was something else, he could have come to harm with either a drug to drug interaction or a lack of effectiveness. And it is the patient is why we're here, so thank you.

SURGEON GENERAL CARMONA: Thank you. Another issue, you know, the issue -- we spend a lot of time, of course, speaking about Canada as maybe being representative when certainly a northern border it is, but we have the southern border with Mexico as well as many other countries that will potentially import drugs in.

Dr. Jennings, you had mentioned looking at the Canadian system. We have and certainly Dr. Crawford and others are expert in that. And I think that we all agree that pharmacy by pharmacy and their pharmacies are like ours and they have a very adequate system, maybe as good as ours. But even in the Canadian government has told us that they don't sanction, nor can they certify the drugs that come through their country not for use by their citizens. So basically there are those we have found in our investigation that take advantage of that and just use the country of Canada as a through put to send the drugs out. And so with that in mind, I take to heart your comments, but when the Canadian government has told us, we can't guarantee the safety because these drugs aren't being used for our people and others take advantage of that, how do we handle that? Because as we've seen through various investigations here from Customs from DEA from others when they do their investigations, a great many internet sites as well as proprietors put up information of Canadian drugs giving the false impression that these are secure when really the Canadian government or their FDA equipment, their health ministry have had nothing to do with that.

DR. JENNINGS: Well, I think for years many patients have gone to Canada and purchased their drugs and brought them back and I guess it would be interesting to look at that history and see if, in fact, they had adverse reactions or they found that the medication was ineffective, the medication that came somewhere else other than the U.S.

MR. SACHDEV: I thought the distinction that Dr. Carmona was trying to draw was between the licensed Canadian pharmacist that the person who drives across the border goes to and what we're seeing now which is operations in Canada that are being created solely or primarily for the purpose of export to the United States. And in that situation, I think that's the situation you were describing, was it not?

MR. SACHDEV: Where the Canadian regulators really in their laws don't focus on those products getting exported, similar to how the U.S. treats our products when we have products that flow through our country for exportation. In that context, I guess that was the question. How do we handle that or what is the -- are the recommendations from this Panel as to what to do about that trans-shipment problem.

SURGEON GENERAL CARMONA: Exactly. I think that we've seen enough information that for the average person who goes across the border to fill a prescription in a licensed pharmacy in Canada is not an issue. But the issue is much broader, much bigger than that because of the importation into Canada, the redistribution and repackaging of medications and really nobody really having oversight of that and then how do we protect the consumer and what recourse does the consumer have when and if there's an adverse reaction to the medication?

So those are the complex issues that have surfaced during this investigation. Do any of you have any comments on any of that?

DR. CRAWFORD: Just to follow up a little bit with that. We are aware and all of you are I'm sure aware through pressure ports and others that companies and others around the world have taken note of the fact that we have a porous border with Canada, that we have this issue that has gained a lot of national and international attention and in effect, Canada is reaffirming this week that they have no control over these products that are so-called trans-shipped. And essentially, these are products that are brought in as, Mr. Sachdev and the Surgeon General have said, they're called import for export products. So they're brought in either in bulk to be repackaged or they're brought in already packaged for export and then if you will, smuggled into the United States.

Our problem with declaring countries of origin would be very, very great indeed. It would be far larger than just say if we certified Canada, for example, we would have to also figure out a way for them to join us or us to get some independent international body to make sure that the products that have come in from other countries that might even be labeled Canadian, we have some supervision over because with every product we regulate, whether it's food products or whatever, we can't stand at the northern border and stop them. We've got to have some system, as all of you have correctly pointed out in your testimony, to deal with it.

But the utilization of the current non-system by people in countries and companies bent on getting the product here at all costs is something I have to tell you is a major concern of ours, as is the possibility of terrorism.

DR. JENNINGS: I just have one question. Is the Panel considering perhaps only approving a very limited number of drugs for importation to begin with, rather than open it to the whole area of prescription drugs?

SURGEON GENERAL CARMONA: Dr. Jennings, at this point we are considering everything. The door is open. In fact, we've had some who have contributed to the docket and haven't spoken and others who have spoken who have made recommendations similar to what you're suggesting, a limited group of drugs and a limited amount of pharmacies and so on and certainly, that will be considered. We haven't reached an opinion yet, and obviously, we still have a great deal of deliberations to consider. But that is one of the options that has been presented to us.

DR. MAXEY: I'm wondering if anyone has dealt with the basic question is with the pharmaceutical companies why don't we charge them like the Canadians or other countries charge them so that from the beginning they come to us at a reasonable price and find some other way to support the research that they need.

We're basically bearing the research dollar that it takes to care for the rest of the world. And you wouldn't have to re-import if they brought it here at the right price in the first place which is a whole different consideration, which may be political.

SURGEON GENERAL CARMONA: We've actually had panel discussions just on that issue. We've had economists from here and abroad who have spoken to us on the global implications of importation on the issues of the United States shouldering the burden of all of the research and development and the rest of the world, in effect, being free riders, what are the possibilities to deal with those issues? We've had discussions about presenting this as a trade issue in negotiations for our government.

So we've heard all of that information and we've still got to synthesize it among our deliberations and come up with a recommendation for the Secretary.

Thank you very much, ladies and gentlemen. We appreciate you being here. We'll switch over to the next Panel right now and just take a quick stretch break and we should back in session in the next couple of minutes. Thank you.

SURGEON GENERAL CARMONA: All right, ladies and gentlemen, we'll go ahead and begin. Our first speaker for Panel 2 is Mr. Carmen Catizone, National Association of Boards of Pharmacy. Thank you, sir.

MR. CATIZONE: Thank you, Dr. Carmona and Members of the Task Force. I serve as the Executive Director of the National Association of Boards of Pharmacy whose members are the state agencies and provincial authorities that regulate the practice of pharmacy in the United States, Canada, Australia, New Zealand and South Africa.

The illegal importation of drugs is one of the most complex and frustrating issues for pharmacy regulators. It's an issue that has the potential of altering how medications are dispensed in the United States and how the practice of pharmacy is regulated. In fact, if illegal importation is allowed to continue, the impact on patient safety, pharmacy practice and the regulation of pharmacy practice will be devastating.

Patients illegally importing drugs are bypassing the drug approval system of the FDA and the safety of U.S. licensed pharmacies and placing their health and well-being in the hands of the country, territory or back room with the seemingly lowest priced pharmaceuticals.

NABP does not oppose importation within the safe and secure regulatory framework of the FDA and the State Boards of Pharmacy. NABP does oppose the illegal importation of medications which is presently occurring.

At our recently concluded annual meeting, the states and provinces passed a resolution which resolved that NABP continue to oppose illegal importation of medications and expressed to the FDA the concerns of member states and strongly urged the FDA or appropriate legal authority to pursue actions against state and local governments for endorsing, promoting or engaging in the illegal importation of medication.

At its worse, the illegal importation of drugs creates the opportunity for unknowing and unsuspecting patients to suffer harm. Counterfeit and dangerous drugs contaminate the U.S. medication distribution system and a thalidomide-like disaster to reoccur.

NABP cannot accept the premise that people must die from the illegal importation of drugs before the existing laws ensuring the safety of patients are complied with and enforced. The "show us the body strategy" proposed by some legislators, governors, mayors and other public officials is irresponsible.

NABP acknowledges that appropriate safeguards exist within Canada's federal and provincial regulatory systems to ensure that the dispensing of medications in Canada to Canadian patients is safe. Unfortunately, the same safeguards do not exist for U.S. patients purchasing and importing drugs from Canada and other countries. The regulatory void and breach of the safety net for U.S. patients is significant and unknown to the overwhelming majority of patients ordering drugs from other countries.

NABP has learned that medications shipped from locations purportedly to be in Canada have originated in Slovenia, Pakistan and Vietnam. Each progression to extend the distribution source to unknown borders further away from the FDA drug approval process and the state regulation of pharmacy practice makes the situation more dangerous. The extension of importation to countries lacking effective drug approval processes, regulatory systems or practice standards further the erosion and destruction of the entire regulatory system for the practice of pharmacy.

The U.S. system, based with the states and the FDA, has been exemplary in protecting the citizens of the various states and providing patients and health care practitioners with the assurances and confidence that the medications prescribed and dispensed are safe and effective products. NABP recognizes that a solution resolving the conflict of affordable access to medications versus safety must be developed to address the needs of U.S. patients and prevent irreparable damage to, if not the elimination of, the regulatory systems in the U.S.

NABP is in discussions with a variety of regulatory agencies and affected stakeholders to develop the necessary framework to regulate the Inter-Board of Practice of Pharmacy in the dispensing of medications to patients in the U.S. and Canada. The framework would provide similar protections as those afforded U.S. patients to utilize pharmacies engaged in the interstate practice of pharmacy and would focus on identifying and monitoring the source of medications.

The framework will coordinate the regulatory efforts and resources of the Canadian provinces and the U.S. State Boards of Pharmacy.

In closing, NABP respectfully requests the Task Force recognize that allowing and encouraging the purchase and importation of medications from other countries without the appropriate regulatory safeguards is a serious threat to our regulatory foundation and patient safety. NABP requests further the Task Force assistance in preserving the sanctity of current regulations so as to prevent any patient from being seriously injured by the illegal importation of medications from other countries where U.S. laws and regulations are being ignored or the laws of that country or territory do not equate to U.S. laws and regulations.

NABP does not believe that even one patient should suffer or be harmed as a consequence of disregarding federal and state laws that ensure the dispensing of safe and effective medications to U.S. patients. Thank you.

SURGEON GENERAL CARMONA: Thank you very much, sir. Our next speaker, Ms. Susan Winckler. Nice to see you again.

MS. WINCKLER: Good to see you, Dr. Carmona and Members of the Task Force, thank you for inviting the American Pharmacists Association to present today.

I'm Susan Winckler. I'm a pharmacist and an attorney and serve as APhA's Vice President for Policy and Communications.

It's important to note that APhA was founded in 1852 because of problems with the medications supply and recognizing that if drugs don't contain what they should or contain things that they should not, we have a problem.

It's interesting that in 2004, APhA's mission is to help improve medication use and advance patient care. I think the problems facing the Task Force today get at both why APhA was founded and what we do today. And that's trying to assure that patients have access to medications that are what they say they are as well as trying to assure that if we provide broader access to medications, that that doesn't pose a problem with coordination of care here in the United States. Those are the two things I'll talk about this afternoon.

The first, talking about product integrity. We are concerned that opening the door to importation, although we try to put in limits, will open the door to those who want to corrupt our system and to introduce counterfeits and we're very concerned about that. We're particularly concerned about that reality in the context of personal importation. And in that idea that if we open the door and allow anyone to import medications, how could we set up a system to try and make sure that it is only the limited, legitimate medications that we want to see.

The second challenge in the product integrity area is that differences in products do matter and this is the difference between the U.S. approved products and what we would see in foreign versions of approved products. It's important as the AMA representative noted that consumers get what their doctor or their physician assistant ordered. And differences matter. It matters if it's a tablet versus a capsule. Differences in names matter when we're trying to make sure that we don't have medication errors. Differences in strengths matter. Differences in salts and esters matter when we're trying to adjust doses and make sure that consumers indeed get what they're looking for.

To address this issue, we frankly would recommend that any importation be limited to FDA-approved products. We recognize that's a very, very narrow range of what's on the international market, at least from our understanding, but you, at least know what it is your pharmacist and your physicians will know what it is that they're dealing with and consumers will know what it is that they're dealing with.

This is where most discussions stop. We stop and we forget that medication use and good pharmacy practice goes beyond getting patients the right drug at the right time. We forget that good medication use requires doctors, pharmacists and patients knowing how to make the best use of that medication. Getting the right drug doesn't mean that the tablets leap out of the bottle and into our bodies and we use them correctly, or that we know how to use inhalers correctly. There's something beyond that.

And importation poorly constructed, can create significant problems there and that's in our coordination of care.

What we're concerned about here is because of the stigma involved in importing medications and what happens today, many patients don't tell their doctors or their pharmacists that they're importing medications, that they're securing those products from outside the U.S. It's understandable and dangerous, because unless the patient provides that information to the pharmacist, they really cannot watch for drug to drug interactions. They cannot help the patient make the best use of that medication if they don't know what it is they're taking.

Limiting a system to a commercial importation helps with some of this challenge because you at least use the distribution systems that are present here in the United States, but we just have to understand that it's more than making sure we have an okay product. We also have to make sure that the doctors and the pharmacists and the consumers who use that product understand how to use it and know to make the best use of it.

The bottom line of what APhA is very concerned about is the recognition and we know the task force has considered this, but I must underscore it, that medications are different. And that it matters what's in the tablet, but it also matters that the consumer knows how to use that.

If we are going to move to a system to legalize importation, as Mr. Catizone mentioned, we have to make sure that it has appropriate protections, not only in statute and regulation, but in enforcement.

I do also have to note that it's unfortunate that Congress failed to establish a task force to address the broader issue that's driving these discussions and that's improving access to necessary medications. The current international pricing structure is flawed and U.S. consumers bear the brunt of that flaw. We want new technology to help us, but we have to bear the disproportionate price for the world.

I regret that we're not here today to talk about how to improve consumer access to medications and to pharmacist services to help them make the best use of their medications. That discussion has promise.

SURGEON GENERAL CARMONA: Thanks very much. Our next speaker, Mr. Douglas Scheckelhoff.

I'm Douglas Scheckelhoff and I'm the Director of Pharmacy Practice Sections at the American Society of Health-System Pharmacists. ASHP is a 30,000 member national professional association that represents pharmacists that practice in health systems including hospitals, ambulatory clinics, HMOs, long term care and home care. I'm pleased to provide you with ASHP's views on the importation of prescription drugs into the United States.

For more than 50 years, the U.S. could boast the safest, most tightly regulated system for approving and distributing prescription drugs. Today, however, there are challenges facing our system. The growing illegal drug trade, including counterfeit medications, rogue internet sites and efforts to open U.S. markets to medications imported from abroad have all raised questions regarding the FDA's ability to respond to those challenges.

First, regarding the impact of unapproved drugs. Pharmacists who work in hospitals are confronted with the issue of purchasing quality pharmaceuticals at the lowest cost on a daily basis. ASHP has received numerous phone calls from pharmacy directors whose hospital administrators have asked them to purchase drugs from Canada at lower prices rather than from U.S. sources. We have referred them to FDA regulations that prohibit that kind of importation, but the pressure to find lower cost, alternate sources remains.

The scope and volume of unapproved drugs entering the United States has raised the concern of ASHP members. That's why our House of Delegates will vote next month to reaffirm the following policy: to oppose importation of pharmaceuticals except in cases in which the Food and Drug Administration determines it would be necessary for the health and welfare of United States citizens.

The issue of safety in our nation's drug supply has been obscured by the issue of allowing individual citizens to purchase prescription drugs at lower prices from non-U.S. locations. While there are no hard data to indicate serious patient harm caused by these imported drugs, and it make take years to identify clusters of problems caused by imported medications, the safety perspective must be the highest priority.

There's another factor of the importation issue that has not been addressed adequately and it relates to foreign terrorism in our nation's counter-terrorism activities. The integrity of the drug supply and the health of consumers is at significant risk if terrorists utilize more lenient importation rules to introduce harmful agents into the United States.

Regarding FDA's ability to assure safety. The FDA's regulatory system has been the world's gold standard of drug approval. To assure the safety of imported products, the FDA will need significantly greater resources to examine those products for quality, purity, safety and effectiveness, since a significant amount of imported drugs are ordered via the internet, the Agency should consider ensuring the adequate regulation of internet pharmacy sites.

Regarding regulatory and legislative issues, the FDA must have the authority to assure the same level of safety for imported drugs as consumers expect from drugs purchased from a state-licensed pharmacy. Consumers are ill-equipped to make these types of risk-benefit decision and there is no added level of risk beyond today's safety standards that ASHP members would consider acceptable.

Regarding technology. The FDA's efforts to encourage manufacturers to include electronic track and trace technology into their product packaging for anti-counterfeiting measures should work well to also prevent the importation of unapproved drugs and to prevent the reintroduction of diverted drug products. Other anti-counterfeiting technologies will improve safety, but will have less impact than that of an effective track and trace system.

Regarding the financial impact. The FDA must thoroughly study the financial impact of importation and determine whether it would actually lower the cost of drugs for American consumers. Regulations put in place to implement Section 1121 of the Medicare Prescription Drug Improvement and Modernization Act of 2003 must not be burdensome to pharmacists or wholesalers. If pharmacists or wholesalers are required to conduct testing or authentication of imported drugs, the additional cost of doing so would largely eliminate the anticipated cost savings for consumers.

In conclusion, ASHP appreciates the opportunity to comment to the FDA on this significant issue. We are ready to assist the Department of Health and Human Services in any way that we can in implementing policies related to the importation of prescription drugs.

DR. SHEPHERD: Mr. Chairman Carmona and Members of the Task Force, the Academy of Managed Care Pharmacy appreciates the opportunity to participate as you receive testimony on the issues related to the importation of prescription drugs.

My name is Marv Shepherd and probably as you can tell from my greeting, I'm from Texas and I'm the Director of the Center for Pharmacoeconomic Studies at the University of Texas. I have been studying the issue of drug importation for over 10 years, especially Mexican drugs coming across the border and now the last three years, Canadian drugs.

The Academy of Managed Care Pharmacy, who I speak for this afternoon, is an association of pharmacists and professionals who serve the patients and the public through managed care principles. The Academy has over 4800 pharmacist members who provide comprehensive coverage in pharmacy service to over 200 million Americans.

The Academy is opposed to proposals that would allow personal importation of prescription drugs. There is no system for double checks on accuracy. There is no counseling on the pharmaceuticals. There's no one to call if you've got a question as a consumer. The potential for problems is particularly serious when individuals are ordering their prescriptions on-line. The prescription order via the internet, from what seems to be a Canadian pharmacy, may in fact, may not be a Canadian pharmacy. In addition, when patients received their medications through individual importation, there's no pharmacist involved who can verify that the patient even understands how to take the pharmaceutical correctly.

Personal importation of pharmaceuticals is growing enormously. In my opinion, it is way out of control as FDA has documented in many documents, approximately 200 million packages coming in last year.

There's no guarantee that legislators, regulators and pharmacists can provide the information necessary to consumers, letting them know whether the imported prescription drugs they are receiving are adulterated, counterfeit or approved for use in the United States and there's also no way for local pharmacists to determine whether the medication is safe and effective.

The Academy also has concerns of proposals that would allow the importation of prescription drugs by U.S. pharmacists and wholesalers. The Academy understands the plight of individuals unable to afford much needed prescription drugs and supports the goal of lowering drug costs for American consumers. However, the anticipated savings, as mentioned already, developed by importation may generate uncertainty between the factors involved in importation and basically the differential in price for specific drugs isn't that great.

The availability of the product for importation is it going to be a consistent availability? You don't want to move from one source to another source.

One negative consequences of the program and I don't believe anybody has ever mentioned this in front of your group, is that I'm a hypothesis believer that it may permit pharmacies and wholesalers to import prescription drugs and the development of a two-tiered drug system in the United States, two-tiered based on cost. If states base reimbursement to pharmacists on the importation base acquisition cost, pharmacies would have to establish a dual inventory system, one system for U.S.-made drugs and one system for imported drugs. That brings all kinds of ramification of control and cost control and patient controls.

Mostly importantly, prudent importation legislation must ensure maintenance of quality assurance as others have stated throughout the international drug distribution system. In order to guarantee patient safety, agencies such as FDA and U.S. Customs Service must have technological and financial resources to address these safety concerns.

I'm telling you, after being at the border of Mexico and monitoring the drugs from across the border, they are in dire need of technology to monitor the pharmaceuticals, dire need. Pen and paper and pencil just doesn't make it.

All of us are aware of the potential for drug counterfeiting and drug counterfeiting is a world-wide problem. No country is immune to drug counterfeiting. However, drug importation, especially personal importation, only opens the door wider for counterfeits in the United States. Counterfeits go where the money is and the United States has the market and an excellent target where the money is.

You will find pharmaceutical fraud, deception and counterfeiting, if we continue with importation. The recent FDA report on combating counterfeit drugs puts forth an excellent strategy for combating drug fraud and ensuring drug integrity for Americans, but at the same time, we have governmental agencies allowing U.S. residents to import substandard, inferior and sometimes counterfeit drug products. We have been fortunate, as already has been mentioned, that we have been fortunate that people haven't been hurt or killed by these products. And I have said and I will continue to say it's only a matter of time before a horrific tragedy involving imported pharmaceuticals will occur.

The Academy believes that until more conclusive data are available as to likely impact the importation on the cost of drugs and the risk imposed to American citizens, we will oppose proposals that allow importation of prescription drugs for sale to U.S. citizens.

Thank you again, for this opportunity and I look forward to answering any questions you may have.

SURGEON GENERAL CARMONA: Thank you, sir. Our next speaker, Mr. Robert McNellis, American Academy of Physician Assistants, thank you for being with us.

MR. McNELLIS: Thank you, Dr. Carmona. Good afternoon, Dr. Carmona, and the rest of the Task Force. I thank you on behalf of the American Academy of Physician Assistants and the 51,000 clinically practicing PAs to provide some testimony today about the perspective, in particular, of PAs and how they're looking at this particular problem.

What PAs have in common, even though they work in every specialty and every state dealing with patients of all ages is a commitment to providing quality, cost effective, accessible healthcare. That is, in fact, our mission statement. And that's really the guidance that I have from our Academy's policies as to what I say today. We don't have a policy on drug importation per se, but we use that to guide it.

For PAs, the focus is really on the patient and it's not to imply that other organizations don't have that perspective as well, and certainly I know that that's in your interest as the patient, but that's all we do is do patient care. And we understand the concerns of consumers, as well as states, that they need to bring in affordable drugs. We understand that the pharmaceutical industry and distributors want to maintain safety as well as incentives for future drug development. But in the world of our members, kind of outside of the beltway, they see this as a balancing act between safety and affordability. Those are the two things that resonate with our members. And that ensuring a safe and genuine drug supply is critical, but so is ensuring an accessible one.

As Dr. Maxey said, safe drugs that are unaffordable aren't really of any benefit to those who need them the most. And I know it's cliché and it's anecdotal as well, but I still get stories from our members about their patients who have to choose between their groceries and their drugs, so it still is a problem.

I'm spoken a lot recently with PAs who are in Maine, Seattle, Detroit and other many of the border states and they tell stories about their older patients getting on buses, the things you've heard probably over and over again during the last five or six listening sessions. But it certainly is happening. And one of our members though described it this way, you know, who is going to Canada to buy their drugs? Is it the insured person who has got a pharmacy card for $20 they can go and pick up their Lipitor? No, probably not. It's the person on low fixed income or the uninsured who are going to essentially pay cash, out of pocket to get less expensive drugs so they can afford them. And then I'm sure the PAs in Texas and California, they certainly have similar stories about Mexico.

But for the most part, our patients seem to be buying brand name drugs, the brand ones are the ones that are the most expensive. They're not going across the border to buy the more affordable generic drugs. And these brand name drugs are essentially manufactured to the same standards, same packaging as drugs sold in the U.S. and there's a sense that the Canadians aren't really suffering any increased consequences due to the unsafe drugs in their system.

Now clearly safety is an issue to consider. Unsafe counterfeit drugs seem to enter the system when the traditional distribution system breaks down, when retailers or distributors buy drugs through other channels or consumers purchase their drugs through internet pharmacies, that's when the supply is most at risk.

PAs, I know, as a profession, don't generally recommend that their patients buy drugs over the internet, unless of course, that particular site might have a reputation for providing quality products. But again, it begs the question, who's going to be buying drugs over the internet? And once again, it seems like it's the most vulnerable who are likely to be scammed or given counterfeit drugs, the patients who are looking for alternative sources to try to afford their drugs, and that demand for less expensive sources of medication seems to have paralleled in some ways as well as other things, the growth of the number of uninsured which the IOM, of course, estimates now at 43 million.

And we appreciate the efforts of pharmaceutical companies to make available discounted drugs to the patients who need them. I note that the process is still a little burdensome, I think. We're also optimistic that the new Medicare discount card will provide our seniors some of the drugs that they can -- more affordable.

We appreciate the viewpoints of Governors that Canada or even Europe might offer solutions to immediate crisis, but unfortunately, unaffordable drugs seems to be just one system of the broader health care problems. And I know it's out of the scope of the Task Force, in particular, but I think this problem is within the context of kind of broader problems with an ailing health care system.

Really, our view of best is that Canada, allowing importation of Canada or other countries is really a limited solution to some of these broader problems. There need to be more permanent solutions to the inequities of drug pricing, especially since from the perspective of PAs, the people who are paying most for their medications are the ones who can least afford it.

Certainly, there are some potential fixes out there. You've heard from lots of experts whether consumers be billed directly from wholesalers or states could negotiate more Canada-like prices, but that's not what we know. What we know is patient care and PAs feel strongly about their role as patient advocates and they know that really affordable drugs is just kind of one part of the whole health care system. They don't have to be either safety or affordable. They need to be both safe and affordable and we need to find ways to diminish that.

So thank you very much for allowing me to express the viewpoints of physician assistants in this very complex debate before you.

SURGEON GENERAL CARMONA: Thanks very much, appreciate it. Now we'll open the floor for my fellow Task Force Members, questions.

DR. CRAWFORD: Dr. Winckler, thank you very much for your testimony, and thank you also for your candor in establishing that re-importation is only a symptom of the larger problem that we're dealing with. Those may not be your words, but they would be good words.

The thing I wanted to focus on in terms of what you said though is the international pricing structure is flawed and although that's a bit beyond the scope of our task, I would appreciate any commentary you would have about how to fix that or how to address it or something like that?

MS. WINCKLER: Sure. I guess it's the one thing that doesn't fit in either my degree in pharmacy nor my degree in law, so --

DR. CRAWFORD: My experience with lawyers in the government is you can stake out any turf you like.

MS. WINCKLER: All right. I guess it comes back to what other people have likely said before you and the economists have pointed out, but we just do have to look at the broader issue and I guess what frustrates APhA and what frustrates our pharmacist members is that we're talking about importing the drugs when it appears what some people want to do is import the price controls. And if that's what you want to do, please talk about that and have that discussion. And I'm not saying that we support price controls, but that would at least seem to be an intellectually honest conversation, rather than this proxy of let's import the drugs.

So I guess broadly what we're looking at is the need to make sure that American consumers have access to the medications that they need, whether that's through making sure we protect the uninsured or the under insured and doing more through that. If it's through direct negotiation for price controls, I don't know those answers, but do know that we have to tackle that broader issue. And is it seeing if this new Medicare drug benefit works for that population. Is it doing something else for the uninsured? Is it doing -- taking other issues and part of the broader issue here too is again remembering it's not only the price of the medication when you get it, it's the value of that medication to the patient, so in the whole cost structure, if they got the right medication, but they don't know how to use it, you've wasted all of the money. And it doesn't matter how expensive or how cheap it was.

So I guess I would just implore the Task Force to recognize and I know you recognize this, that it's a much broader issue and whatever we can do to underscore those challenges, will be important in your report.

MR. SACHDEV: I have some for each and all of you, but particularly for Mr. Catizone. We've heard testimony from the Minnesota Governor about the program that Minnesota has set up. We've heard testimony from other Governors about state programs that have been set up that facilitate importation by creating websites that link to particular Canadian pharmacies for their state citizens to use in purchasing prescription drugs.

In Minnesota, in particular, the Minnesota Board of Pharmacy issued a report when they evaluated Canadian pharmacies that they wanted to link to where they found seven of the nine pharmacies they looked at, Canadian pharmacies they looked at were deficient in some way or another and so in the end that state ended up linking to two particular pharmacies as opposed to more than that.

Can you comment on why you think there were deficiencies in those Canadian mail order type pharmacies and whether you think that is indicative of a distinction between maybe the practice of pharmacy in the U.S. and what we're seeing in terms of the practice of pharmacies that are exporting products to the U.S.?

MR. CATIZONE: What concerned us about that whole process is that it operated outside of the traditional regulatory framework and process, so that even though members of the Minnesota Board of Pharmacy were involved in that inspection, we would categorize that inspection as a visit and not an inspection that would normally be conducted on a traditional brick and mortar pharmacy or a pharmacy based in the U.S.

The pharmacy was given notice of the inspection or visit. The inspectors were restricted to certain areas of the pharmacy. They were not allowed to talk to any of the pharmacists involved in that operation and instead, only spoke to the business agents and the lawyers representing those pharmacies. They were also restricted from asking questions about certain information or requesting certain information that would be part of a normal inspection.

So our concern with the inspections, in general, and with the approaches that many of the Governors have taken is that they are bypassing and operating outside of the standard regulatory framework. So it's not a question of the Canadian system not being equivalent to, it's the system being employed by these Governors in states to bypass traditional regulatory safeguards. Those seven of nine pharmacies that did not meet those standards had serious problems with recording the source of the medications, recording the patient interactions, recording very important critical patient data and dispensing information about those medications and therefore those seven pharmacies were rejected.

MR. SACHDEV: My question was, and it's open to anyone here, but why do you think that is? Why was there an 80 percent deficiency rate for these pharmacies that were looking at to participate, even despite the fact that they knew people were coming and looking at their facilities?

MS. WINCKLER: I think part of the challenge comes from the challenge of trying to at some level meet a different federal and different state laws. Those pharmacies, I'm sure, are very good at meeting the provincial law and the law that they have to meet for Canada, but as I understand it, the Minnesota folks were looking at how it compared with the Minnesota law and rules and very challenging for those individuals and entities to navigate that complex system.

The pharmacies in the U.S. that serve patients in all 50 states have extensive processes set up so that they can try to meet all the different requirements that we have from state to state and comply with the federal system and I can't imagine them trying to learn and comply with an international set as well.

DR. SHEPHERD: One possible reason why there was neglect of some of the regulations is the fact that the growth of the industry. In 1999, there were 10 Canadian internet pharmacies. Right now, you've got 120, most of which are located in one province and when you look at the news articles on this one province, it's pretty lax and there's a big rift between the community pharmacists and the internet pharmacy operations in that province. There's actually a big rift between those two.

The internet pharmacies are stealing them out of the community pharmacies by offering higher wages. There's a shortage. Internet pharmacies are having troubles getting access to drugs. They're buying off the independents from the communications I'm getting. They can't get the drug out of the wholesaler. There's a shortage, so they're buying it from independents and independents have the opportunity to make the money or the community pharmacy, so they end up selling them under the table to the internet pharmacies in order to dispense. So it's kind of like a fast growth industry that the Manitoba pharmacists have just started to jump on in the internet section and develop it. So it could be part of the growth. It may smooth out. I'm not saying it won't, but I think that's probably the reason.

MR. SACHDEV: I do have a follow up. And this is open to all of you, we've heard a lot of discussion here in listening sessions about the types of drugs that are, in fact, being imported today in this country from not just Canada, but elsewhere. And varying points of view about the quality of those drugs and in particular, their equivalency to federal standards, but also the equivalency between how they're dispensed in terms of foreign pharmacies versus U.S.

Generally, do members of this panel have evidence or reason to believe that the products that are coming in are, in fact, more likely to be the same as, equivalent or more likely to not be similar or the same as U.S.-approved product based on what you know?

DR. SHEPHERD: When I visited a couple, three mail operations that received the drugs back and we've opened up packages, I can unequivocally say that I don't think they're equivalent, the vast majority of the products. They are not equivalent.

When you get products coming in in baggies, boxes of them, and they're talking about a 90-day limit, quantity, I've seen boxes half the size of this table addressed to personal people in Southwest United States, filled with baggies filled with tablets and capsules.

I've seen bags, envelopes, three by four cartons of nothing but Viagra and sexual dysfunction drugs coming in one day. Thirty thousand drug packages are coming in daily right now in Miami, a day. You multiply that by the 13 other sites out there, you can imagine. But I cannot say that the products are equivalent. They're coming from all over the world, Brazil, Argentina, Chile, South Africa, Nigeria, Vietnam, Cambodia. They're coming from everywhere.

Canadian -- well, I think Mr. McNellis talked about this, I think Canadians only represented 18 percent of the packages out of 1400 that were opened coming out of Canada. But they're coming world wide.

And I want to dispel a myth here. Everybody is talking about price and use of the internet. I agree with you that price is important, why people do it. But I also believe access, you don't need a prescription with these people, is a big issue. You don't need a prescription. So you get your oxycodone or any other narcotic or drug you want without going to the doctor and that's the number one reason why they go to Mexico, is access. I don't need a prescription. The drugs are all over the counter. You can walk in any pharmacy in Mexico and buy anything you want, except for the controlled substances, without a prescription.

It's hard to get that data and I've tried to get that data to figure out what's the demographics of people using the internet and because of the patient confidentiality, you cannot get that data to even survey them. But I'm -- I really believe that there are a lot of elderly or a lot of seniors and a lot of people who can't afford drugs using them. There's no other about it. But I also believe there are a lot of young people doing it because of the easy access. They don't have to go see a doctor, they can just fill out a form and get it wherever you want to get it.

MR. CATIZONE: I think your question is actually two questions. Are the drugs approved through Health Canada's drug approval process equivalent to the U.S. FDA approved drug products and I think from NABP's perspective which is not as scientific as the FDA, the answer would appear to be yes.

The second part of the question is though are patients in the U.S. receiving those Health Canada approved products and the answer is no. In the cases that we've studied where consumers have complained to us, they are coming from outside that Canadian drug approval process. Our colleagues in Canada effectively regulate the practice of pharmacy and those internet pharmacies that would allow an FDA and state board inspection, would be able to provide safe, effective medications to U.S. citizens.

Those pharmacies that you asked about in your first question that have stepped forward and jumped on this bandwagon, they would probably not allow an FDA state board inspection and therefore they probably shouldn't be operating in Canada or the U.S.

MR. SACHDEV: One follow up question that flows from testimony that we heard from the listening session two weeks ago from a woman from a key Canadian equivalent, NAPRA, and the question was asked about the trans shipment issue that was discussed by Dr. Carmona and Dr. Crawford and whether or not under the provincial authorities and they obviously vary in Canada, but under the provincial authorities, generally, would the trans shipment of a product from Europe to Canada and then from Canada to the United States or the facilitation by Canadian pharmacy of shipment of a product from Europe, say the U.K. to a U.S. consumer, where it didn't actually flow through Canada, but still is facilitated by a Canadian pharmacy through a mail order operation, they testified that it was their belief in both those instances under provincial pharmacy regulatory authority in most of the provinces, in all of the ones that testified, which I believe included Ontario, Manitoba and Quebec, that it was, in fact, unapproved.

We've heard differences of opinion and I wanted to get your opinion on that, on that practice and also to have you elaborate a little bit more about what your inter border regulatory proposal would do in terms of assessing sort of the pharmacies. And these are two questions, but the pharmacies' practices in Canada versus the ones in the United States.

MR. CATIZONE: We would concur with the testimony from Barbara Wells of NAPRA in that those products are unapproved and that the provincial authorities and Health Canada and I know there's a representative from Ontario that will speak on the third panel. As Dr. Carmona and Dr. Crawford mentioned though, they are not regulated or monitored by Health Canada or the provincial authorities.

MR. SACHDEV: Okay, so because we haven't had Health Canada, they were not able to attend, all we have is their public statements from the past. And so what we're trying to ascertain is we want to get a clear answer. I think it's very important for this group, as we go and try to respond to the questions, a clear answer about what folks' understanding is of the trans shipment issue, but in particular, how the Canadian laws at both the federal level and also at the provincial level address products that are not necessarily Canadian licensed, but are intended for export and the intersection with U.S. law in that regard.

DR. SHEPHERD: I have a comment and an issue. I don't know if you're aware or not, but the Canadian ‑‑ Health Canada does not visit facilities outside their country for approval of drugs. I'll repeat that: they do not visit that facility outside of Canada for approval.

When you're a manufacturer in Canada ‑‑ and I downloaded their forms and I'm in Ecuador and I want to export to Canada ‑‑ I fill out a one- or two-page form that says I comply with the Canadian good manufacturing processes and sign my name and I can ship the drug in.

So they don't ‑‑ like FDA visits facilities for FDA-approved drugs, Canada doesn't do that. So I don't think that we're going to have the equivalent approval process when you look at it for the processes and the inspections of the plants involved with it. And it could be the same plant where you got an FDA-approved drug going through Canada. That very well could be, but they don't ‑‑ they don't leave the country.

MR. AHERN: Dr. Shepherd, very quickly, you said you've done a lot of study with importation of pharmaceuticals from Mexico, and recently have now started to do some studies in Canada as well.

MR. AHERN: Have you seen any significant ‑‑ and you also made a statement that the Canadian supply is starting to be depleted or diminished. Are you starting to see any shift from the Mexican supply into the Canadian supply?

DR. SHEPHERD: I don't ‑‑ I know the types of drugs ‑‑ that VancouverCanadianPharmacyTrust.com site is shipping Mexican-made sexual dysfunction drugs to U.S. people, and neither drug ‑‑ both drugs have been approved by Health Canada or the United States. That's been published, and it was published two weeks ago in Scripts Reports World Health News, that U.S. consumers have been reporting the product coming out of Mexico and being shipped through Canada.

MR. AHERN: And very briefly, also, you made a statement here that FDA and the Customs Service should have the technological resources to address some of the safety concerns. What would be some of the technological resources you believe would help the situation?

DR. SHEPHERD: Just monitoring the amount of drug coming across the border, whether you're in Canada or the United States, is a difficult task. You can ‑‑ I'll give you an example. You stand on the border of Nuevo Laredo, Mexico, and Laredo, Texas. You have 25- to 30,000 people walk across that bridge in one Saturday afternoon.

One in two people will bring back pharmaceuticals. And they won't bring back just a 30-day supply; they'll bring back a shopping bag full of pharmaceuticals. I've seen people drop $2- or $3,000 going over there.

Now, when they come back through U.S. Customs there, and the U.S. Customs agent has no way of recording all of that information ‑‑ it's a pencil and paper job, declaration form, even document to what extent the drugs are coming across the border, what are the products, what's the quantity, what's the value?

They're required to fill out ‑‑ if they're asked, they're required to fill out a declaration form where they estimate how much they bought. Most of them don't even estimate it. Most of them just stick the drugs in the bag, and they just walk across the border.

But just monitoring the process and knowing exactly what they're buying and the demographics, there's just no data. And it's ‑‑ to me, there ought to be a way that you can electronically scan the label out of Mexico, electronically get the information in a sheet, and just do it periodically just to keep track of what's coming in and what's going out of the country. But right now that doesn't exist.

We have tried to develop something like that and tried to work with Customs on it. It's difficult. That's the first thing I would do. We don't ‑‑ if you can just give me the demographic information of who is using the internet, that would provide this task force with immense information. You don't even have that.

I have a question for Mr. Catizone, because it's keyed off the statement in your testimony, but others may want to address it as well.

The statement is, if the illegal importation of drugs into the U.S. is allowed to continue, the impact on patient safety, pharmacy practice, and regulation of pharmacy practice will be devastating.

Many of our witnesses have talked about the first item ‑‑ of the jeopardy for individuals. Others have not addressed how the impact would be adverse on either pharmacy practice or the regulation thereof, and I'd appreciate it if you'd elaborate on that. And others may want to comment as well.

MR. CATIZONE: Our specific concerns are that the importation is bypassing all of the state regulatory systems. So inspections or visits are being conducted by personnel other than the boards of pharmacy, even though the state legislatures have decreed that the responsibility of those state agencies.

State laws are being ignored and bypassed. In the State of Illinois, it was interesting ‑‑ our Attorney General, in dealing with the last gaming license to be awarded to a land-based casino, voided that license and those proceedings and said that she could not worry about the state balancing its budget in lieu of following state laws, but yet she allows importation to occur, even though it is breaking state laws and does create, in our opinion, serious patient harm.

DR. RAUB: There's an erosion of the confidence in the regulatory ‑‑ I mean, it seems like it's going on outside the regulatory mechanism. I'm trying to understand the link as to why the regulatory infrastructure is harmed.

MR. CATIZONE: Once a decision is made that you don't need to follow state regulation, and that the governor or other public officials ‑‑ based upon economic reasons ‑‑ can decide which laws to follow or not, there's really no need for a State Board of Pharmacy or state regulation. The governors or other public officials can simply decide based upon what's best for the economic structure of the state.

MS. WINCKLER: I'll start with a challenge to pharmacy practice, and part of that challenge is coming in when the pharmacist ‑‑ you have a patient who is importing something, and then they need an acute prescription. So they go to the local pharmacy for a pain medication or an antibiotic or something else. Ask the patient what they are taking.

In some situations, the consumer will not tell the pharmacist and probably didn't tell the physician about what they're importing, because they may know it's illegal or simply may not remember to do that. If they do tell them, it creates a challenge for the pharmacist, because it's the consumer reporting that they are importing a cholesterol-lowering medication.

But trying to do a drug-to-drug interaction check when you may not know what the cholesterol-lowering medication is, or know anything about the foreign version of the medication, creates challenges.

One of the things we've talked about, if importation were to be legalized and you let in things other than FDA-approved products, we would have to change all of the databases and clinical decision support tools that pharmacists and physicians use to make sure that they include not only the U.S. versions but the foreign versions, so they could get information about that. So you create those complexities.

You also create a challenge that many pharmacists face every day when consumers walk in with those medications. And similar to the question they asked to one of the previous panelists, they'll put the tablets in their hand and say, "Is this okay to take?" That's a question that we've observed for our members they can't answer.

They don't know the answer to that question, and then you could get into all kinds of liability concerns if they were to answer ‑‑ you know, if they become engaged and answer the question and provide all of that advice. It's just this gray area that starts to take a challenging health care profession and very important work and make it even more challenging.

MR. SCHECKELHOFF: I think as you allow importation, especially if it's through internet pharmacies, you start to erode a few things ‑‑ one, the patient-pharmacist relationship, where the pharmacist is trying to work with the patient to assure that they're taking their medication properly.

And so the pharmacist's time really gets shifted from assuring safe and effective medication use to product integrity, which for many years they've been able to assume that if a product is FDA-approved that it has integrity and it's a safe and effective drug product.

Now you start to shift it away to where the pharmacist has to second-guess what the patient has received, and you also start to remove some of the checks and balances that come with the traditional U.S. dispensing system, where the pharmacist is reviewing the order of the physician and evaluating the appropriateness of that drug, and then dispensing it to the patient.

So, again, if you have a patient who is receiving a product through an internet pharmacy, you have a pharmacist who ‑‑ or you may or may not have a pharmacist who is dispensing that product from that internet site, wherever it's at, who typically does not know all of the patient's information, what their condition is, what their diagnosis is, and you lose a lot of the benefits and checks and balances that come through our traditional system.

MS. WILLIS: All of you have been very articulate in the dangers posed by the personal importation of drugs. My question is: how do you feel about a government-approved system of importing of drugs, where the patient would not be responsible but the government would be approving some system of importation? How do you think that would affect your patient care and practice of pharmacy? And also, and the impact on the regulatory system?

DR. SHEPHERD: I'll take a shot at that. Just off the top of my head, there's two issues that affect pharmacy practice. And I think I'll draw a picture for you here.

You've got a brand-name drug made in the United States, high-priced premium product. Okay? Let's say it just goes off patent. Now you get a generic drug that comes underneath it and it's going to be approximately 30 to 35 percent less. That's what usually generics start at.

Now you're going to import a product ‑‑ maybe the brand-name product is going to be imported ‑‑ and I am anticipating, after seeing some of the figures that have come across from different countries, it will be less than a generic product. Imported product, it has a potential to be less in price than a generic product.

Now I ask you: what is that going to do to the generic market in the United States? If you took an old product, a brand-name, the generic product, and the imported product, the imported product most likely ‑‑ if it's coming out of Cambodia or Egypt ‑‑ will be less costly than the generic product. Most likely, very well could be.

And now you've put another spur in the whole market system in the United States of saying, "Okay. Where is the generic market going to fly in this thing? How is it going to compete?" And as I said earlier, I think you're going to end up with two inventory systems.

You're going to have some third party pay system that says, "I want U.S.-made products only." And you're going to have some systems, let's say the Medicaid program in the State of Illinois, who wants to cut their cost. Okay. Well, we will reimburse the pharmacist at the imported cost.

No pharmacist out there is going to dispense ‑‑ I can't think of a pharmacist out there that is going to dispense the brand-name product and get reimbursed for the quantity of that product out of the State of Illinois at the imported price. He's going to be losing his shirt every time he does it.

So he's going to have to have, or she's going to have to have, the pharmacy is going to have to have an inventory of imported products in order to fit that system's plan. And maybe if another health care plan says, "Hey, you know, I don't trust those imported drugs, I only want U.S. drugs," another drug, so you double this inventory in this store, and different products and different placements of it.

And you may have ruined and eroded ‑‑ definitely may not have ruined it, but you've eroded the generic place in the marketplace. And I think we ‑‑ you need to sit down and think about that. Where do the generics play in this role, and how would an imported product erode that market? It very well could erode it devastatingly in no time at all.

MS. WINCKLER: I think the challenge in a government-regulated commercial importation system is the details and the structure. Is it only FDA-approved products? So you take care of some of the clinical confusion that we've talked about.

Are there limits on the port of entry, so that doctors and pharmacists don't have to question when they turn around to the pharmacy shelf if indeed they're getting a quality product or not. If those questions can be answered, you resolve many of the issues. But then you have questions of whether the external supplies can meet the need that may be created by third party payers or government payers and those types of things.

So we would have much less concern with a well-constructed, closely-regulated, and well-enforced system for commercial importation than most of the things that have been talked about or debated in Congress.

Well, one from me. You know, as you can see, we've got a dilemma, and it's a tough one. It's been characterized quite simply as: what do we tell the senior citizen who walks across the border and is not aware of or cares about the complexity of all of the issues that you bring to us, and your peers who have come before you, but just wants to get the medication cheaper because it's competing for food dollars or for housing dollars.

So I'll just ask a rather broad question, though, in maybe two parts. Is importation a viable option? And if so, how do you do it?

There are two questions here. Number one, is importation a viable option? I think, as stated earlier, it is a viable option on selected products. You could possibly import on selected products knowing the source and where it comes from. That's a possibility.

You'd have to really double check on it and make sure you got it, and I would rule out ‑‑ if we want to know what those products is, number one, I would rule out narrow therapeutic index drugs. They are too vulnerable and too costly. I have seen too many patients go across to Mexico and get diabetic medications and get welfare, and then come back and they're back in the hospital. They're just too vulnerable in the dosage forms. I'd rule them out.

But you could possibly come up with a list and make sure it's FDA approved from the right sources, if you can determine that.

How do you do it? If you choose Canada ‑‑ and I just did ‑‑ in fact, I just told Tom a little while ago I just did a report for the House Energy and Commerce Committee on the Canadian market. Canadians right now are importing more drugs than they're making, and U.S. share of the importation is decreasing. It's decreasing. It's not ‑‑ it's increasing as a dollar amount. As a matter of fact, it has gone up a billion dollars since 1999, to Canada from the United States.

However, as a proportion of the total amount of imports that Canada gets, it's been dropping. It's down to 43 percent right now. And the other drugs they are bringing in, other countries are bringing in, is ‑‑ it's over 100. They're coming from everywhere into that system.

So how would I do it, if I was going to send one of my graduate students and do it? I would come up with a list of the high-cost drugs that our elderly need, and that's my target market ‑‑ the elderly or the people who have low costs. I'd come up with a list of utilization of the highest cost drugs possibly out there that are really causing the problems. And it could be, you know, 10, 15. It could be 30.

Now, let's look at sources of possible structuring importation, get good quality product in from those other sources. And maybe we could do it that way. And then you've got to structure it so the point of who is going to get them and what people are going to get them, because everybody in that pharmacy is going to come in and want that drug. You may have to designate who is going to get them, because I don't think you're going to get it.

Whenever you have a supply and demand, you're going to have a lower supply here, and you're going to have a heck of a lot of demand ‑‑ that raises your price. It's straight Economics 101. It's going to happen in Canada, and you're seeing it in Canada. The prices will gradually go up as we get more and more demand in the system, and so the differential now is shaping down as much as it can.

SURGEON GENERAL CARMONA: All right. If you're entertaining this, then, a follow-on. The hypothesis you present ‑‑ and, please, the rest of you also, if you have some input ‑‑ add in the consideration of a short-term versus a long-term remedy as it relates to economics to marketplace, and just our strategic plan.

DR. SHEPHERD: It would be a short-term solution, because I do think the prices would adjust over time. You may not get the savings five years from the time you started it. However, you may lower U.S. prices. You just may, and I ‑‑ I really believe that's where you should start right there is negotiating with those people and getting a task force on pricing in the United States pharmaceuticals.

But I think that the possibility is you may lower them, and you could increase the amount of generics out there and make better availability, as the former FDA Chairman made very good progress to developing generics that are on the market, faster approval.

But it's possible to do, but you'd have to be very careful with it. And I'm not too sure ‑‑ even the top 50 drugs, it's a small percentage of the total arsenal of drugs we have. So it may not have a big impact.

MR. CATIZONE: In response to your first and second question, is it a viable option? It's an option for access to affordable medications or more affordable medications. Is it viable? Only if those safety issues are addressed.

How can you do it? I think very simply. You would have to make sure that the product met the same standards and went through the same approval process currently in place for the U.S. and through the FDA. And once that was assured, the second part of that would be to make sure every chain of that distribution system was licensed or registered in the states as the current system is. So wholesalers, pharmacies, pharmacists, there would have to be that accountability in licensure or registration in the United States.

Is it a short-term or long-term solution? If your long-term solution or strategy is globalization and harmonization, then rather than pick a select number of drugs I would go country by country and approve those countries or ‑‑ or devise those regulatory frameworks with those countries, because once you put standards in place they should be able to meet those standards for any product.

And if they can't meet them for certain products, then that country shouldn't be involved in exporting drugs to the U.S. So the solution, both long term and short term, is exporting the U.S. regulatory system to other countries that can meet the standards that we require for U.S. patients.

SURGEON GENERAL CARMONA: Just one second. In effect, I think as Ms. Winckler pointed out earlier, then we ‑‑ it's quite complex. We're importing price controls I guess is one way to look at it, and we're exporting something else.

Let me defer, then, to Mr. Sachdev for now, and then I'll come back with another.

MR. SACHDEV: To follow up on that comment, which is a good one, so then would you be suggesting ‑‑ are there certain categories of products that you would think would not be appropriate for importation in that context? Or would it just be once a country has established a standard that anything from that country could be allowed in?

MR. CATIZONE: I think once the country was approved and the standards put in place, and the regulatory framework, then it would be country rather than products.

MR. CATIZONE: Yes. Because there would be a partnership between those regulatory authorities in that country to monitor those products as well as adherence to an FDA similar equivalent system for drug approval.

MR. SACHDEV: Now, that's actually something I need to ask you about, because you originally said basically the same as FDA. Now you're saying similar or equivalent. Is there a distinction you're trying to draw?

MS. WINCKLER: I guess I would add a step into what Dr. Shepherd said when he said, "Let's look at the drugs where we would need to do this." If indeed the idea is that we want to provide cost to lower ‑‑ I'm sorry ‑‑ want to provide access to lower cost pharmaceuticals, I guess I'd put in a second step there.

When you have that list, then look at what alternatives are available in the U.S. that you don't need to go to importation. And you may end your inquiry there. Let's remember viable option doesn't mean only option.

If, though, we need to go to the system, I think narrowing as best we can is the best approach, if we can ‑‑ I guess I'd say narrow the products, certainly narrow the countries, and we have to keep the U.S. system intact. In my written statement, I had about ‑‑ I think it's only nine things that you'd want to check, including the coordination with the U.S. health care system, the liability concerns, the pharmacist-patient-physician relationship ‑‑ all of those things.

If we can do that in a narrow subset, I think we're better off. But that's the only viable option.

MR. CATIZONE: From a public policy issue, I think we have to look at what our patients are doing. Despite warnings from the FDA, despite warnings from the state boards of pharmacy that this is illegal and dangerous, they are still ordering medications.

If we close Canada, if we close other countries, they will find ways to order those medications. So all we can do at this point is be responsible and say, "Here is a safe country or here are safe pharmacies for you to use," and hope that those citizens will use those pharmacies and then take action against those entities that promote illegal importation outside of that safety net which we have created.

Now that the internet has been opened, we're never going to stop that flow of illegal drugs to patients. They have already decided the issue in many regards.

MR. SACHDEV: On this point ‑‑ and this was a very interesting line of discussion ‑‑ we haven't had this one at the task force before. If you're doing a list ‑‑ if you're deciding whether to have an importation scheme where you limit the products coming in to some set amount of products versus a system where you would allow, for instance, maybe country delineations ‑‑ it raises the question that I want you all to speak clearly about if you can, about how you think it would work in terms of the mechanism by which the U.S. regulatory authority ‑‑ in this case the FDA ‑‑ would do its job.

Would we be at the border essentially trying to make determinations about products that are coming in? Or, in fact, what you're speaking about is an approval process that's broader than just the inspector, because I think one of the issues that has been raised that's a really difficult question is, how you would have ‑‑ how you take a law that's designed to go from pre-market approval and include inspections and turn it on its head at the border and have an individual inspector try to apply all of those requirements by looking at a product when it comes in.

And so I need to understand in your proposals what you mean. Are we talking about border inspectors trying to assess equivalency, or something else?

MR. CATIZONE: If truly you want to stop this practice, it's going to require significant resources and mean that there has to be resources and actions on all fronts. So that would mean from the individual consumer, when they're ordering these medications, we have to go after the credit card companies, we have to go after the shippers. At the border, we have to confiscate packages. Within the U.S., anything facilitating those suppliers also needs to be prosecuted as well as in the foreign countries where they're originating.

Again, it's amazing to us that we ‑‑ that the industry was able to shut down the life-threatening sharing of music files through Napster, but we can't stop importation. So it's ‑‑ if you want to stop it, it involves resources and going after the individuals.

MR. SACHDEV: Well, my question wasn't really about stopping them. It was really to understand what you're suggesting in terms of how you do it.

MR. CATIZONE: Well, it's difficult to control product by product, because I would say controlled substances are the most dangerous products at this point that are being ordered over the internet.

We've seen a proliferation of e-mails and products crossing the border that I'm not sure anybody could stop at this point. So if you put together a list of products, patients are not going to adhere to that list. They're going to find other sources for the medications they want.

MS. WINCKLER: That's why the list only works if you're talking about a commercial importation system. So the person only stopped at the border through the credit card and the couriers and all of those mechanisms. And if it's through commercial, you would have to license those who are outside the country, providing to those inside the country, and then you have an access point or something to go after with ‑‑ on both sides of the border.

SURGEON GENERAL CARMONA: Okay. It seems that most of you ‑‑ all of you are in agreement that under certain conditions this could be a possible short-term remedy for the problem. But as Ms. Winckler pointed out earlier, and those of you who spoke also alluded to, that the problem is much bigger than just importation.

It seems to me, though, that in all of your comments what we're talking about here is developing an adjunct or additive regulatory investigative oversight authority complementary to FDA, to Customs, to DEA, to be able to do their jobs in a broader fashion than they do now, which incurs a huge cost, more resources.

So at what point does that cost-benefit analysis fall the other way and we say, "Well, all this is, really, is a shell game. We're shifting the cost over here, and ultimately government, then, is subsidizing this one way ‑‑ either directly or indirectly."

DR. SHEPHERD: Right. You're right. You're absolutely right. You'd have to do some kind of analysis or some kind of a sensitivity analysis on what costs ‑‑ let me put it this way. What costs can we afford to invest in such a system? And then figure out what everything is going to cost. Do we have that money to invest in it? And then I'm not too sure we'll get our return on it.

Thank you so much for your patience. I know we kept you a little longer, but that was great insight for us. Thank you very much.

We're going to take a 10-minute break as we switch over to the last panel. Thank you.

(Whereupon, the proceedings in the foregoing matter went off the record at 3:13 p.m. and went back on the record at 3:27 p.m.)

SURGEON GENERAL CARMONA: Ladies and gentlemen, we'll reconvene. Please take your seats.

We'll begin with the third and final panel, and our first speaker, Ms. Deanna Williams, Ontario College of Pharmacists.

MS. WILLIAMS: Thank you. Dr. Carmona and members of the task force, thank you very much for having me today.

My name is Deanna Williams, and I am the Registrar for the Ontario College of Pharmacists. And the Ontario College of Pharmacists is the largest regulatory and licensing body for the profession of pharmacy in Canada. We currently have 10,000 members on our register, which means that we regulate approximately 40 percent of pharmacists in Canada.

And in addition to our pharmacist members, we also regulate 3,000 community pharmacies, and according to operational standards of practice, and we also regulate the sale of drugs from Ontario.

It's our position that the college has had high quality, cognitive standards of practice for pharmacists, and operational standards for pharmacies must be met regardless of where patients who obtain their pharmacy services from Ontario reside. And our standards include the pharmacist establishing a professional relationship with their patients, and taking reasonable steps to enter into a dialogue on their drug therapy.

In all situations where drugs are delivered to patients, the college's standards for packaging, shipping, and delivery, and that includes Canada customs rules and regulations for delivery outside of Canada, have to be met.

The college's Point of Care symbol, which I've included in your package and I'm showing you now, must also, as a standard of accreditation, be prominently displayed in all accredited community pharmacies and also on their related websites.

In Ontario, our legislation does not contemplate virtual pharmacies. So all Ontario pharmacies are brick-and-mortar pharmacies that are accredited and inspected routinely by our college inspectors once every three years to ensure compliance with our standards.

We have 3,000 pharmacies currently that we issue certificates of accreditation to, and of those our records show that under 300 of them, and at last count there were about 271 that indicate that they do operate websites that are available to the public.

Now, the majority of the pharmacies in Ontario that operate websites simply use their websites as a manner of communicating with members. So the same way they would use faxes, telephones, and so on.

The exact number of pharmacies that are actually providing internet services to the U.S. patients is not certain. But what we do know is that the practice does primarily ‑‑ it is directed to patients that are residing outside of Canada. And we do investigate each and every such operation as they become known to us through various means.

Although this practice gives rise to issues and to potential issues, as a regulator that is charged with protection of the public our position remains grounded in knowing that Ontario has a safe and effective self-regulatory system that protects the public, whether they reside in Ontario or not.

And that system that we have in place protects against practitioners ‑‑ in our case pharmacists ‑‑ but in Ontario the College of Physicians and Surgeons would say also prescribers, and pharmacies that fall below our standards of practice.

We have processed complaints and investigated complaints that we have received from U.S. patients, and we'll continue to do so. We believe that this is also true to be across Canada and would suggest that the American public is not at risk if they obtain their pharmacy services from legitimate licensed and accredited pharmacists and pharmacies in Canada.

Our primary issue of concern is increasing inability of us as regulators to protect the public against internet sites that purport to be but are not legitimate. An increasing number of websites are cropping up with a Canadian flag on them that promote themselves as pharmacies located in Canada when in fact they are not.

In the spring of 2002, our college, acting under the authority of the Provincial Offenses Act, closed down an illegal operation that was selling drugs to the American public under the name TheCanadianDrugstore.com. We laid a total of 15 charges under the POA against the operation, its owner and operator, who is not a pharmacist, including using the name "drugstore," which in Ontario is a protected title and can only be used by accredited pharmacies.

We also laid charges against an Ontario pharmacist, their pharmacy, a physician, and a Canadian drug wholesaler for their roles in aiding and abetting this illegal operation. The case was successfully prosecuted, and there are copies attached I believe in your package of the press releases outlining the results.

Our prosecutorial actions against TheCanadianDrugstore.com were necessary, but they were extremely resource-heavy. And I think it really underscores the need and the importance of a cooperative and coordinated approach in pursuing rogue internet prescription drug sites.

We also believe that focusing our attention on the procurement of prescription drugs from bona fide regulated and safe pharmacists and pharmacies that are based in Canada ‑‑ in our opinion, this is not helpful, and it actually diminishes our effectiveness in protecting the public against potentially dangerous drugs obtained through the unregulated sites.

Also, as regulators, we can't totally solve the problem unless we have an effective public education and communications system on both sides of the border. We can't protect the public against themselves, and the public needs to understand the dangers that exist if they go in and put in personal information and personal health information into sites that are not bona fide.

The VIPPS program established by the National Association of Boards of Pharmacy, which is just starting to come into play in Canada, the college's Point of Care Program, are examples of programs that offer assurances to the American public that pharmacy sites from which they seek their prescription services are both legitimate and subject to regulation.

These programs are just a good start, though. And it's our view that much more needs to be done to inform the public of the importance of verifying the legitimacy of their health care providers.

Our next speaker, Mr. Donald MacArthur, from the European Association of Euro-Pharmaceutical Companies. Thank you, sir.

MR. MacARTHUR: Mr. Chairman, task force members, thank you very much for inviting the European Association of Euro-Pharmaceutical Companies to submit its views. With over 70 firms from 16 European countries as members, the EAEPC is the professional representative body of pharmaceutical parallel importers and exporters ‑‑ we call them collectively parallel traders ‑‑ in Europe.

Ours is an industry that in its best ever year, 2002, shipped 140 million packs of prescription medicine safely and efficiently across national borders within the EU's internal market. Here is an example of a repackaged pack sourced in ‑‑ a product that was sourced in Italy and sold in Denmark.

Parallel trade exists because of interstate price differences, but it simply would not happen if, after meeting its costs, a parallel trader did not pass on a significant part of the price difference to the payer. In Europe, the payer is predominantly the social health insurance system.

Direct savings to such systems and consumers in 2002 in just five EU countries were independently quantified in excess of $745 million, with indirect savings through parallel trade's competitive effect in an otherwise monopolistic market likely to be even higher, the study found.

Twenty plus years' experience in Europe has conclusively shown that pharmaceutical parallel trade is safe. It can be strictly limited to genuine products that have been approved for marketing to common high European standards and produced by the same original brand manufacturers as the domestic version. There has never been one confirmed case of a counterfeit drug reaching a patient in Europe as a parallel import.

Parallel trade would fit very well into the U.S. free market principles. One of the reasons why governments in the UK and Germany, the two largest markets for incoming parallel trade, have been able to avoid introducing manufacturer price controls with new innovative drugs, is that use of parallel trade by pharmacists is officially encouraged there.

Parallel trade, as found in Europe, is very different from personal importation, whether by mail order, internet, or on foot. That has been the basis of U.S. experience to date. Ours is a mature, highly regulated, business-to-business activity. We have no direct dealings with the public, and instead supply only authorized wholesalers and/or registered pharmacies.

It is the community hospital pharmacist's professional decision whether parallel trade is dispensed to the patient or not. With parallel trade, the product's origin, quality, and storage conditions could be assured. The chain is a closed one. Only authorized products are purchased from authorized wholesalers in one EU country and sold to authorized distributors in another EU country by parallel traders, which are themselves authorized by no less than four different controls.

Pharmacists purchase parallel trade because it gives them and their patients a choice. It also is financially rewarding to pharmacists. Parallel trade supports rather than threatens the local distribution ‑‑ sorry, the local pharmacy infrastructure. It is also suitable for all types of products, not just including ‑‑ not just repeats of chronic medication.

As I mentioned, 2002 was our peak year. Growth in the major markets was flat last year, and this year there is likely to be negative growth. This is not because the demand for parallel trade is lessening, or because interstate price differences are narrowing, it is simply because of counter strategies by manufacturers.

The main problem has been the introduction over the past two to three years of supply quota systems by an increasing number of major multi-national manufacturers. SRPA stock that was one traded has been eliminated in Europe.

As well as hitting parallel trade, quotas have damaged the business of wholesalers and also led to product shortages, which have, of course, public health implications. The EAEPC, its members, and I'm very pleased to say the European Association of Full Line Pharmaceutical Wholesalers, GRP, G-R-P, allege quotas breach EU competition rules.

Around 50 complaints against a total of 15 manufacturers are believed to be currently pending before European and national competition authorities. We are constantly reminded that we have the support of the European Commission. Only this January, the Commission issued a communication reaffirming the legality of parallel trade in medicines.

However, antitrust investigations have to be very thorough to withstand robust examination in the courts. And with manufacturers making full use of their appeal rights, a case can drag on for a decade or more.

In conclusion, Mr. Chairman, while EAEPC strongly supports all those who advocate parallel importation of prescription drugs into the U.S., Europe unfortunately is not currently the solution or an alternative to supply shortages in Canada. We have the know-how and the expertise certainly. I don't think anybody else in the world has better know-how and expertise.

And I would like you and your colleagues, please, to come and visit us in Europe to see it for yourself. But we have supply shortages of our own. We, therefore, urge U.S. lawmakers to ensure future importation legislation contains effective measures to penalize manufacturers that obstruct free trade into the U.S., especially artificial volume restrictions in the countries they are supplying.

I understand this indeed is the case with two bills tabled recently in the Senate. This is a very encouraging development.

Our next speaker, Mr. David MacKay, the Canadian International Pharmacy Association. Thank you, sir.

MR. MacKAY: Good afternoon. I'd like to thank you, Dr. Carmona, as well as the Health and Human Services Task Force, for the opportunity to present a Canadian perspective on drug importation or what I term the "supplier's view."

I'd like to start by telling you a little bit about CIPA, or the Canadian International Pharmacy Association. We represent the views of the vast majority of the leading Canadian mail order pharmacies that provide prescription services to American patients. CIPA members provide roughly more than 80 percent of the mail order prescriptions to now more than two million Americans.

Our members have been dispensing safe and affordable medications to American citizens for over three years now, and each of the members adheres to all legal and regulatory requirements imposed by the Canadian government as well as the provinces and the regulatory authorities in the provinces that they dispense medications in.

Again, also like Mr. MacArthur, I would like to invite all officials, interested members of Congress, and members of the task force, to actually visit our Canadian pharmacies in action. I think you'll get a very interesting perspective once you actually see what it is that you'd like to study. And a lot of your questions could be answered from there.

CIPA strongly supports U.S. congressional legislation that would allow for the safe and legal importation of personal mail order pharmacy products from Canada by Americans. CIPA believes that the Canadian mail order program should simply be an option for Americans that complements other available drug benefit programs, like the Medicare drug benefit as well as the discount cards.

CIPA applauds the initiatives undertaken by the American government to provide more support for seniors and the poor who need lower cost pharmaceuticals. The American government can implement a viable, safe, and secure Canadian mail order option.

We have some recommendations. For Americans to benefit from pharmaceuticals from Canada, CIPA urges the task force and the American government to consider a program that will do the following. I have three key recommendations. The first two are actually off safety. I'll talk about safety in the third and would be happy to take more questions about regulation and standards of practice for CIPA members in the Q&A.

But the first two are interesting because they're very critical and are as important as safety is to the success of the program. So the first recommendation ‑‑ limit importation to personal mail order only.

As the supplier with close ties to Health Canada and firsthand knowledge of the Canadian market, CIPA assures all stakeholders that implementation of any importation program, based on commercial, wholesale, or bulk channel of trade, will quickly lead to the complete collapse of this program.

Without adequate supply, the Canadian system will not be able to sustain the huge demand that would be placed on it by the bulk cross-border transfer of drugs. This massive diversion of supply would result in wide-scale drug shortages for Canadians. The Canadian government will not tolerate any program that jeopardizes the health and welfare of Canadians, and thus will be forced to close down the border to this trade.

There has been a misinterpretation that Canadian companies can import products on a wholesale basis from foreign countries for purposes of exporting to other countries like the United States, under Section 37 of our Food and Drug Act.

According to Health Canada ‑‑ and I have some further evidence here specifically stating this ‑‑ according to Health Canada, it is illegal for Canadian suppliers to import pharmaceutical products from other nations and resell it to any country, including the United States. Therefore, Canada truly has a very limited supply.

For Section 37 to be invoked, you would actually have to manufacturer the products in Canada. This is a common misnomer and misinterpretation by a number of officials.

Of equal concern would be the opening of the supply chain to the increased likelihood of counterfeit penetration due to the integration of a vast wholesale network that permits repackaging and re-labeling. In Q&A, I'd like to comment on the difference between the wholesale versions between the United States and Canada. It's a significant point. There's inherent safeguards in the Canadian system that should be considered.

Although legislation may contain prohibitions and incentives to reduce the likelihood of manufacturers cutting the supply to Canada, just the very threat of wholesale distribution could force the Canadian government to intervene by halting cross-border trade.

If American access to Canadian supply disappears, Americans will seek their pharmacy products, as Mr. Catizone had mentioned, from other sources ‑‑ over the internet, sources that are less secure, less safe, and more open to counterfeit and illegal substances.

Secondly ‑‑ our second recommendation ‑‑ Congress must impose non-discrimination language and sanctions and incentives, because today the Canadian supply is in jeopardy. Recent restrictive trade terms that have been imposed on Canadian pharmacies and wholesalers by several manufacturers, resulting in a supply crisis ‑‑ for example, Pfizer, Eli Lilly, Astra Zeneca, Wyeth, Novartis, Glaxo, and Boehringer Ingelheim, have all successfully cut off supply of their drugs through Canadian mail order pharmacies by engaging in a harsh distribution tactic known as blacklisting.

This has resulted in a complete lack of availability of select products, which casts patients into a dangerous scenario of non-compliance with their prescribed therapies. From a caregiver perspective, this is unacceptable and begs the urgent assistance of U.S. legislators to intervene on behalf of American patients.

Although attractive prices from Canada can be guaranteed, the supply cannot. Since the manufacturers seem determined to pursue an insensitive and unyielding course of prohibition of Canadian product, it will be up to Congress, and perhaps this task force, to ensure that strong and meaningful non-discrimination provisions be cemented into any proposed importation legislation. Without adequate supply, this choice for seniors and others becomes an exercise in futility.

If the Canadian option is shut out, millions of Americans will seek lower-cost pharmaceuticals from other countries and suppliers that don't meet the same strict regulatory requirements as in Canada. These people may be inadvertently forced into the hands of counterfeiters and black marketeers ‑‑ the so-called buyer beware environment or the wild, wild west that's often referred to.

Our third recommendation is to integrate FDA and HHS standards into CIPA safety standards from Canada. CIPA certified pharmacies are among the safest and most highly regulated practices in the world. Each of them are licensed and inspected by provincial regulatory authorities and sell only Health Canada or what's known as TPD ‑‑ Therapeutic Products Directorate ‑‑ approved products that were made in licensed manufacturing facilities under GMPs, good manufacturing practices.

Many of these facilities are licensed by the FDA in their sharing of mutual recognition agreements between these facilities and the governments associated with them, as well as CIPA-certified pharmacies comply with additional standards of practice set specifically for international mail order services.

In most cases, imported Canadian drugs are mailed directly to the U.S. patients in the original manufacturer's container, with tamper-evident seals intact. We only break the product when we have to in terms of quantity ‑‑ for a bottle of 250, for example.

MR. MacKAY: Counterfeit penetration of the Canadian wholesale system is negligible because of the system itself. CIPA-certified pharmacies will welcome any further regulatory oversight that is deemed necessary by Congress or this task force.

As an expert in international mail order systems, CIPA would want to work with the FDA and HHS to develop appropriate standards that will satisfy all stakeholders and ensure safe and affordable drug access for American citizens.

Our next speaker, Mr. Nathan Jacobson, from MagenDavidMeds.com, from Israel. Thank you for being with us, sir.

MR. JACOBSON: Thank you. I appreciate the opportunity to appear before you today. My name is Nathan Jacobson, and I am the President and CEO of MagenDavidMeds.com.

Sitting here and listening to the task force members and the stakeholders speak has truly convinced me that it was worthwhile to board my flight in Tel Aviv at 1:00 this morning. And I thank you.

MagenDavidMeds.com is an internet pharmacy operating out of Israel. For time zone, language, and cultural reasons, we have established a call center in North America. We began operating in January of this year after three years of planning and have been very pleased at the interest we have received and the growing number of orders that we are filling.

In our various publications, we often refer to the Gutenberg printing press. We do so because we see an analogy with today's internet pharmacies. The Gutenberg press was a new technology that made the printed word more accessible to the masses in a format and at a cost that the masses could more readily absorb.

The Gutenberg press was a catalyst for an exponential increase in literacy and general learning that played a role in the industrial revolution and the spread of democracy across Europe. Nevertheless, the Gutenberg press was reviled by the vested interests in society who previously exercised a monopoly on information and used that monopoly to maintain political, social, and economic control.

In exactly the same way the internet, as the new technology, has been a social and economic leveler, with all its faults has brought political, economic, and social empowerment to every corner of the globe.

Internet pharmacies such as MagenDavidMeds.com are a subcomponent of the internet revolution. We aim to provide a low cost, but entirely safe, alternative to the multi-national pharmaceutical companies and the conventional supply chain. As happened with Gutenberg, we have been reviled by the vested interests in the drug business whose market dominance and profits may be threatened.

If I were one of those vested interests, I would be concerned, too, because obviously a gap has developed between what U.S. consumers want and what U.S. pharmaceuticals are prepared to give. An overwhelming number of Americans take prescription drugs or have a family member who does. The high cost of prescription drugs in the United States is driving more and more people to internet pharmacies and cross-border purchases and has made the internet pharmacies an overnight success.

Internet pharmacies are responding to an enormous pent-up demand. Recent polls conducted in this country indicate that nearly a third of Americans say that paying for prescription drugs is a problem for their families, and many are cutting dosages or going without as a consequence.

In another poll, nearly two-thirds of respondents said American government should make it easier to buy cheaper drugs from Canada and other countries. Eighty percent of Americans in another poll believe that the high cost of prescription drugs will be an issue in the campaigns for your elections this November. Almost half of those polls said that it would be a very important issue.

The high cost of prescription drugs impacts particularly on the most vulnerable populations ‑‑ seniors, people without private insurance, the disabled, the unemployed, and the working poor. Our research has identified over 200 elected officials ‑‑ from Mayors to U.S. Congressmen and Senators ‑‑ who have expressed their support for internet pharmacies on behalf of their constituents.

In response to the alternative presented by internet pharmacies, the vested interests and their agents have propagated a number of myths in order to try and shake the public's confidence in and support for internet pharmacies.

I'd like to spend some time on the ‑‑ of the time allotted to me today to address a few of those myths. One myth is that internet pharmacies, unlike the pharmaceutical giants, sell drugs that are produced outside of the United States. As such, so the myth goes, they are less safe than drugs manufactured in the United States and their purchase reduces the number of jobs and other economic spinoffs that the U.S. pharmaceuticals generate in the United States.

The facts are these: about 86 percent of all prescription medications bought in the United States are manufactured outside of the United States. The United States imports over $40 billion in pharmaceuticals yearly. One of the largest-selling drugs in the world ‑‑ Lipitor ‑‑ is manufactured in Ireland. So is Viagra. Nexium is produced in Sweden, France, and other countries. Prevacid is produced in Japan.

Many of the drugs sourced through internet pharmacies are identical in every way to drugs produced by the major multi-nationals. In fact, many of them are produced by those multi-nationals.

Another myth is that internet pharmacies are engaged in counterfeit pharmaceuticals. Countries such as India, Pakistan, and China have been targeted by former FBI agents hired by the pharmaceutical companies as hot spots for the black market counterfeit medications. And in the past few weeks, Israel has suddenly been alleged to be one of those hot spots.

I cannot speak for other internet pharmacies. I can only speak from MagenDavidMeds.com. In our case, the facts are: Israel's security system for pharmaceuticals is second to none in the world, and the reasons are obvious. El Al is the world's most secure airline, and I'd venture to say that Israel's pharmaceutical industry is the most secure in the world.

Another myth is that internet pharmacies are breaking the law or at least operating on the fringes of the law. Again, in the case of MagenDavidMeds.com, we are operating in full compliance with U.S. and Israeli laws, in particular within the free trade agreement between Israel and the United States executed in 2001.

We only accept prescriptions from registered health care practitioners who are authorized by state law to issue prescriptions in the United States, and we have a team of Israeli-registered pharmacists who verify the authenticity of every prescription.

Prescriptions must be sent to us by post or facsimile. No online ordering is allowed. We do not trade in narcotics, controlled substances as defined by U.S. law, or habit-forming medications of any kind. Another myth is that those who patronize internet pharmacies are putting themselves at risk.

The facts in the case of MagenDavidMeds.com are these: drug safety regulations is, in many respects, stricter or more effective in Israel than in the United States. Medications sold by pharmacists in North America are usually received by the pharmacist in bulk, typically in containers of 250, 500, or 1,000 pills or capsules.

The medication is then usually manually counted through these devices by the dispensing pharmacist and repackaged into smaller containers for the patient. This is the way it's been done from time immemorial, but when medications are dispensed in this manner patient safety can be compromised.

Manual handling leads to sanitary concerns. The conventional approach increases the potential for counterfeiting and dispensing of stale, dated medication, because expiring date and lot numbers from the original container do not make their way through to consumers.

Under our system, all medications sold by MagenDavidMeds.com are sourced from FDA-approved facilities. All medications purchased by our customers are delivered in the original manufacturer's packaging, including sealed, foil blister packs, typically 30 pills per sheet.

Consumers also receive the medical profile and any warnings for the medication written in English, Hebrew, and Arabic.

MR. JACOBSON: In fact, Israel is internationally recognized as a pharmaceutical center of excellence. Israel leads the world in the number of scientists and technicians in the workforce ‑‑ 145 per 10,000, as opposed to 85 per 10,000 in the United States.

In price terms, we are simply benefiting from the lower prices of pharmaceuticals that apply governing outside the U.S. and the discounts we receive through the government.

We would like to work with the United States. We welcome members of the United States authorities to visit our pharmacies within Israel, and we believe that the United States ‑‑ the FDA ‑‑ has a lot to learn from the way medications are dispensed in Israel in order to guarantee the security of the American population.

Let's open the floor, then, to task force members for questions, comments. Yes, Ms. Hardin.

MS. HARDIN: This is a question for Ms. Williams and Mr. MacKay, and this was something that was alluded to in one of our earlier panels. We've heard a little bit of conflicting information about the legality and regulation of trans-shipment of drugs in Canada. And I was wondering if you could address that for us.

MS. WILLIAMS: I would concur with what was said earlier, and that is that we would consider that any drug that is not approved for sale by Health Canada to for ‑‑ in Canada is an illegal entity. And in Ontario, we would use every resource that's available to us to enforce that.

MR. MacKAY: In terms of the CIPA members, I can speak for them. On the shelves of all CIPA members will only be products with a drug identification or a DIN number equal to your NDC number. Any violation other than that, because of the fact that we receive surprise inspections from both Health Canada as well as provincial regulatory authorities, would be an extremely foolish move, something that would be found very easily and very quickly.

None of our members trans-ship products. There may be products coming in porously through the border for consumption in Canada, but they are not ending up on the shelves of the Canadian mail order pharmacies, and thus re-exported to the United States. That is not occurring.

MS. HARDIN: And just to follow up, if you could just outline for us, to the extent you can, what recourse provincial authorities or federal authorities have against pharmacies that may be illegally trans-shipping.

MR. MacKAY: If a registrar were to find that there was a violation of the Food and Drug Act, that would be reported to Health Canada. Health Canada could take action to work with the provincial government to remove the license for that pharmacy, and thus effectively put the pharmacy out of business if they ‑‑ they may be warned.

I won't speak for Health Canada or the provincial regulatory authorities. But on an inspection report, that would be typical ‑‑ a warning and potentially closing down the pharmacy by removing the license.

MS. WILLIAMS: Just to add to that ‑‑ we could ‑‑ as a regulator, if we found that that was happening, we have the authority to prosecute through our own internal disciplinary system. Both the holder of the certificate of accreditation, who is a pharmacist, because in Ontario pharmacists own pharmacies ‑‑ as well as take away the accreditation certificate for the operation of the pharmacy itself.

MR. SACHDEV: This one is for Mr. MacArthur. In a listening session about three weeks ago, actually the public listening session, we had testimony from Dr. Kanavos I believe, from the London School of Economics, and he provided us with some very interesting data that we hadn't seen before about the savings that are being achieved in Europe as a result of parallel trading.

And in particular, the statistic that we were interested to learn was about the extent to which the savings were being passed on to purchasers. In his testimony, he said less ‑‑ between one and three percent of savings that could be realized by parallel trading in Europe were being passed on to purchasers, and he speculated that ‑‑ and he said that a large proportion of the savings were actually being achieved by the wholesalers. And he speculated about why he thought that was.

Is that data that you would agree with? And do you have a sense of why that is, in fact, the case in Europe?

MR. MacARTHUR: Well, Dr. Kanavos' study is completely flawed. It's widely recognized in Europe. It is not used by European industry to support its arguments.

We issued a three-page press release. I can go through some of the main points if you'd like, or I can send it to you. I mean, for a start, he looked at 19 drugs. The average parallel importer will have 1,000 products.

The penetration of parallel trade in those 19 drugs ‑‑ in Denmark, for example, ‑‑ ranges from naught ‑‑ naught percent to 0.2 percent I think from memory. You know, he didn't look at the products that were parallel traded.

Another glaring fault is that he assumed that parallel traders could source at the lowest price in Europe when, in fact, because of the quotas our members have to source from eight, 10, even sometimes more countries. And of course this has huge cost implications as well.

He expressed savings as a percentage of pharmacy purchase price, whereas of course the payers in Europe pay the full reimbursement price, which includes the pharmacy margin, the wholesale, and value added tax, which can be 50 percent on top of the pharmacy purchase price.

What other serious flaws ‑‑ I mean, you know, I can go on. The study is flawed.

MR. SACHDEV: Well, actually, my question was is, do you have your own opinion about the extent to which there are savings being realized by consumers or purchasers ‑‑

MR. SACHDEV: ‑‑ in Europe versus savings that are being realized back into the system by wholesales?

MR. MacARTHUR: Yes, yes. Well, as I said in my testimony, we ‑‑ Johnson & Johnson sponsored the LSE ‑‑ or London School of Economics study led by Dr. Kanavos. We sponsored ‑‑ it was not a secret ‑‑ another study, an earlier study, which probably provoked Big Farmer to sponsor its study. We sponsored one from the University of York, which has one of the oldest, most reputable center of health economics in the world.

And that is the figure of $745 million equivalent that I quoted ‑‑ came from that study in five countries of direct savings. Also, it's a study which we can happily ‑‑ it's on our website. It's on the York website. It includes lots of charts showing the competitive effect of parallel trade. Where prices have been stable, parallel trade enters and the parallel trader provokes a response ‑‑ pricing response.

There is a price war that results. Very often the parallel trader is forced off the market, but in Europe you can't invariably increase prices, so that low price that's being produced by parallel trade continues. So, you know, just a threat of parallel trade is enough to provoke sometimes a response from Big Farmer.

So we think it has a very important competitive effect. There were discussions earlier today I heard about the sort of short-term nature of importation. Well, parallel trade, as I say, in Europe has been going on for 20, 30 years. It is consistently realizing savings.

You have to have competition. Otherwise, you know, you have a monopoly situation, and prices only go one way. To keep prices down you need continual parallel trade.

MR. SACHDEV: I think that would be very helpful. I would have loved to have had you at the public meeting when Dr. Kanavos was here ‑‑

‑‑ so you could have spoken together. But we would have ‑‑ we would very much appreciate additional information, in particular about because there is widespread speculation about the extent to which any savings that might be realized under legalized importation ‑‑

MR. MacARTHUR: If there were no savings, why would anybody prescribe, dispense, or purchase, you know, parallel trade. It's the same product, exactly the same product. There is no benefit to anyone.

MR. SACHDEV: Right. But what we as a task force are trying to determine ‑‑ and I think this is an important question ‑‑ is the extent to which the experience in Europe would apply in the U.S. and the extent to which it wouldn't. And that's a factual question that I think we would very much appreciate further information about.

MR. SACHDEV: This is for Mr. MacKay. I want to be clear, because this is also something that we've heard recently in the press ‑‑ we're read recently about the ‑‑ because of limitations on supply in Canada and potential shortages that are resulting because of the actions of the pharmaceutical companies, that some of the pharmaceutical cross-border pharmacies in Canada are beginning ‑‑ are looking at contracts with European or UK sources.

Are those pharmacies the ones that are your members, or do you ‑‑ under your ‑‑ the guidelines that you laid out, would they not be allowed, as a condition of membership, to source from Europe?

MR. MacKAY: The ones that I know that are doing it are members of CIPA, and we boldly support what they're doing. What's unacceptable is facing a patient with noncompliance. What we first do is offer them to consult with their physician for a therapeutic alternative, but that sometimes is not optimal. You may not want to switch into this ‑‑ into a product that's in the same class.

Failing that, we do ‑‑ when I say "we," three or four pharmacies to date have successfully engaged in partnerships with British pharmacies, not wholesalers, not parallel traders, but pharmacies. And what would happen is the patient would be referred to ‑‑ there is no trans-shipment involved ‑‑ as an option with a signed declaration of consent to be referred to a British pharmacy.

If they agreed to ‑‑ and they get a lot of information on the MHRA and the regulatory authority in Britain. And if they agree, the product is directly mailed from Great Britain to their location in the United States. And we do support that.

MR. SACHDEV: That's a question that has come up at several of these listening sessions. And it was Barbara Wells from NAPRA and ‑‑ as well as the Quebec and Manitoba pharmacy regulatory authorities that indicated that whether it was shipped directly from Europe to the U.S. consumer, or through Canada to the U.S. consumer, they determined ‑‑ they believed that both of those activities were unapproved under their provincial authorities.

MR. MacKAY: Not at all. I've spoken to Health Canada several times, just left Ottawa a couple of days ago. They have no issue with this so far. It's not breaking any Canadian laws. We're not jeopardizing safety insofar as we're taking regulatory from Canada and now shifting it to Great Britain, where I would have no issue whatsoever. But that's an individual choice to make about the personal decision to go with Great Britain with the regulatory controls there.

But I can tell you that I fundamentally and categorically would deny that Health Canada feels this is illegal.

MR. SACHDEV: Okay. That's helpful, because this is ‑‑ we now have actually a factual inconsistency between prior testimony. It would be very helpful to us because Health Canada was unable or chose not to come to this forum to get more clarity there.

MS. WILLIAMS: Well, I mean, we have always taken the position that a drug that is not approved by Health Canada for sale in Canada is not a legal entity, and we do have issues with that.

I should tell you, we were at a meeting last week. All of the medical regulators, pharmacy regulators, and members of Health Canada were at a meeting last week in Ottawa. And, you know, we talked ‑‑ all of these issues were put on the table, so while I can't speak for Health Canada, I would encourage you to do so.

You know, certainly, these are issues that are very right up in the forefront right now, and that are going to require some decision, so that the legitimate pharmacy operations that are trying to do a right ‑‑ the right thing with respect to serving the patients that they serve, you know, do need guidance.

MR. SACHDEV: That would be ‑‑ we would love to speak to Health Canada. We've certainly tried. And we would ‑‑ we'll continue to try. In the meantime, if there's anything from those proceedings that you mentioned that would be illustrative or useful for us, we'd very much appreciate that because we do have on the record for us now testimony that's different than what you all provided today, and we'll have to try to reconcile that with the Canadian officials.

MR. MacKAY: Health Canada I think has a view ‑‑ I don't entirely speak for them, but because the product is not touching down in Canada, because it is not Health Canada or TPD-approved with a DIN number on it, there is a perception that that is not a Health Canada issue in terms of mandate for supervision and regulatory control.

It's a British product that's being ordered by an American patient. It really takes Canada right out of the picture. The Canadian Pharmacies Act is a broker for that transaction. They don't even receive payment. The payments are being received in Britain. We're simply guiding the American patient to a British pharmacy.

MR. SACHDEV: And that's the question we asked the Canadian provincial regulators the last time, and they all three said that they believed that was the ‑‑ the unapproved dispensing of a product. And that ‑‑ and I think it was Barbara Wells who said she had heard directly from Health Canada that that was unapproved.

That's what has resulted in our having some confusion here that we'd like to get ‑‑

MR. MacKAY: I would suggest that it's unapproved because it's outside of their realm and mandate of jurisdiction.

MR. MacKAY: Right, it's outside their authority. It wouldn't be approved. They can't approve it, because it's outside their jurisdiction.

MR. SACHDEV: And so a pharmacy in Canada that was engaging in that practice would be violating provincial authority?

MR. MacKAY: Not in my view. I'm saying that it's ‑‑ how can I put it? If it's unapproved ‑‑ they can't possibly approve or unapprove it, because it's outside their jurisdiction.

MR. SACHDEV: Okay. And so as to a cross-border pharmacy that exists in that province, you're saying they don't have authority over the cross-border pharmacy for that product?

MR. MacKAY: In the case of a product coming from Great Britain, that's exactly what I'm suggesting.

MR. SACHDEV: Okay. So that would be outside of ‑‑ that's an important point, too, for us. So that would be outside of the scope of the provincial regulatory authority.

MS. WILLIAMS: I was just going to add ‑‑ I think there is maybe two practices going on. One is where our pharmacies actually are providing the product where the product is coming into the pharmacy that's in our provincial authority over which we do have regulatory authority, and then shipping to the U.S., and that is illegal.

And I would suggest there's a different practice that is being suggested here, which has to do more with facilitating the procurement of a drug where it's not actually coming in through Canada or so ‑‑

MS. WILLIAMS: I'm thinking that their ‑‑ I'm not sure that what our ‑‑ my colleague said was ‑‑ like they may have been reacting to one thing and not the other. I don't know if it was clarified. So we have to just ‑‑ I'd just be wanting to clarify that.

MR. SACHDEV: That would be great, because we did ask specifically both questions separately. And I'd like to ‑‑ we'd love to hear back from both the provincial level and the Health Canada level.

Mr. MacKay, we talked earlier with the prior panel about the Canadian pharmacies that were cross-border pharmacies that were working with states like Minnesota. And I asked, I think it was Mr. Catizone, about ‑‑ and the other members about why they thought there were deficiencies from ‑‑ with the majority of those pharmacies.

MR. MacKAY: Appreciate that. Actually, all of them were my members, and it's my understanding it was actually eight instead of nine, but that may be a moot point.

Of the eight that were inspected, two were approved, four were from the province of Manitoba, which were instantly disqualified due to an issue that the provincial regulatory authority had with cross-border between Manitoba and Minnesota due to the fact that the state board in Minnesota has not licensed Manitoba.

It's a technicality that has since been somewhat ironed out. Therefore, four were instantly disqualified, which leaves two that had issues.

Now, I will point out that some of the deficiencies are actually differences in the regulatory standards between Minnesota and Manitoba. However, I don't want to look like we're trying to skirt this. One particular pharmacy was the vast majority of the transgressions and discrepancies.

And I have in front of me right here a response to the Minnesota report from that pharmacy. It's ADV Care. It's ‑‑ I believe it's out of Toronto, and it goes through point by point. I'd like to submit it to you ‑‑

MR. MacKAY: ‑‑ to actually see the ‑‑ not so much the rebuttal, but we're accepting the fact that there were some issues. And I think the spirit of any report should be that we have the opportunity to improve and effect change. And that's exactly what happened in the case of this pharmacy.

We'll take ownership for the fact there were problems. But after a period of time, this pharmacy took the necessary steps to make sure that the improvements were put in place.

MR. SACHDEV: At a broader level, where you have basically a cross-border pharmacy that is trying to comply with 50 different U.S. state pharmacy regimes, how do you ‑‑ how do we reconcile the issue of, while there were problems with Minnesota because they may have different requirements than the provincial authority in which your pharmacies operate, you might have different problems with North Dakota or different problems with Wyoming, how do you handle that?

MR. MacKAY: Well, truly, I don't think you can apply the state ‑‑ one by one, the state regulatory standards versus Canada, because you will have a nightmare on your hands in trying to match them up.

I think you need to come up with a national set of standards. I'm not suggesting that the National Board of Pharmacy shouldn't be involved. We'll welcome anybody, whether it's the FDA, HHS, whether you liaise with Health Canada, or whether the state boards ‑‑ national state board is involved.

We have nothing to hide. We'll take all comers. Whoever wants to come see our pharmacies, and approve the standards of practice, we welcome them.

MR. SACHDEV: But without that ‑‑ and that's a good point. And without that national standard, is there really any way for your members to, on a state-by-state basis, comply with these types of inspections?

MR. MacKAY: That would be chaotic, because you'd have to go through them one at a time with a fine tooth comb, and it would ‑‑ I think it would be overwhelming and just impractical.

MR. SACHDEV: Governor Pawlenty was here ‑‑ I think it was last week or the week before ‑‑ and he testified that there had been subsequent trips up by the Minnesota pharmacists to evaluate additional facilities.

MR. MacARTHUR: Yes. The reason why they did a second trip is, Minnesota being geographically close to Manitoba, they tend to really prefer Manitoba pharmacies, because they've always sent their busses there. So they wanted to put some Manitoba pharmacies on their website.

The reason they couldn't do it the first time is because of that technicality I referred to that had to do with the Manitoba Pharmaceutical Association having an issue with the State Board of Minnesota licensing any pharmacies for that website.

Now, they've since ironed it out, and they are asking Cody Wyberg from Department of Human Services to go pick some more Manitoba pharmacies this time, because they were noticeably absent in the first round.

MR. MacKAY: Yes. They've made the inspections. I'm sure recommendations will be made shortly to Kevin Goodnull, and I'm sure you'll see Manitoba pharmacies up on that website shortly.

MR. SACHDEV: That's great. Are there any drugs ‑‑ we've heard ‑‑ this is a comment we've asked all of the panels. Are there any drugs or other products, like controlled substances, injectables, that you believe should not be eligible for importation at this time?

MR. MacKAY: Well, I don't want to hog the mike here, but we've gone through this process with a number of states already, because, as you know, four or five states have actually put up a website. So we go through this a lot.

Definitely narcotics, anything that is a scheduled product, Schedule 5, painkillers, any controlled substances, any habit-forming drugs, benzodiazepenes, dealing with a complicated dosing schedule, anything that is just going to be trouble in terms of making sure it's well monitored ‑‑ lifestyle drugs ‑‑ Viagra, Cialis.

Biologics are tricky. We tend to prefer to avoid them ‑‑ any of the injectibles ‑‑ because on a mail order basis sometimes you may not guarantee they will be picked up in time. Although the majority of these products are stable at room temperature, they should be refrigerated as a precaution.

Therefore, our advice to our members is to stay away from the injectibles. You could eliminate them if you felt they were going to be trouble.

There is also issues of whether a generic ‑‑ for example, Zocor ‑‑ is genericized in Canada, is not genericized in the U.S. You do not have a situation of exact equivalence there. You may want to avoid those.

Interesting to point out, this gets down to sort of the practicality of it. I did an analysis of the top 100 drugs that we sell to Americans. As you know, they're mostly chronic and maintenance medications. When you get down to the issue about whether there would be some problems about interpreting like different names ‑‑ Peratin in Canada is Aciphex here. Prilosec here is Losec in Canada. Name differences or dosing differences.

Do you know how many actually occurred of the top 100 that would potentially come into problematic viewpoint here? Six. That is all we're talking about.

I could easily walk this task force through in half an hour the top 100. We could come to agreements on the bioequivalence of every single one of those drugs. We would only have to argue about six of them.

MR. SACHDEV: And so hearkening back to a conversation we had from the other panels, where they were discussing whether or not importation, if it were legalized, should or should not be limited to a number of drugs, is that something that you would suggest would be acceptable?

MR. MacKAY: Absolutely. You know, we want to do this in a practical, workable manner. We don't want to encourage problems. We know what the high risk pharmaceutical products are. Let's avoid them.

We've been doing this for three years. We've kind of mastered what is a problem and what's not. We know what to avoid. So we could hopefully offer you some very good advice in that regard.

MR. MacARTHUR: Perhaps I could just comment on parallel importation, which is very different. We're often accused of cherry picking products. But as I said, often our members will sell 1,000 products maybe out of the 8,000 on the market. We tend not to get involved in generics, simply because we cannot compete with ‑‑ you know, the original brands in Europe cannot compete with a properly competitive generic price.

We're not involved with OTCs, but I would say almost the entire range of prescription drugs, especially under patent, as I say, are ‑‑ can be and are parallel traded in all strengths ‑‑ to say all dosage forms ‑‑ injectibles, vaccines, insulins, everything. I'm not sure about narcotics; I have to pass on that.

But I said the whole chain is certainly respected, and, you know, we don't know quality issues arising through parallel trade as opposed to direct importation.

MS. WILLIAMS: I'd have to say that I would support what was said earlier by some of my colleagues with respect to opening ‑‑ if you're going to allow ‑‑ legalize importation, that it should be open across the board, provided, you know, acceptable regulatory frameworks are in place. And that's based on our position ‑‑ mine as a pharmacist and our college position ‑‑ that it's in the patient's best interest to procure their pharmacy services from, wherever possible, one pharmacy and one provider.

The problem I would have with, you know, saying you can get some drugs this way, and you have to go other places to get other categories of drugs, is that you lose. It becomes very fragmented ‑‑ the patient care ‑‑ and I don't believe that's in the public interest.

You know, the ones that are filling one category of drugs may not have access to the information as to what they're getting from somewhere else. And it may also drive, you know, the practice underground into the illegitimate sites. If they can't get certain categories from legitimate pharmacies, where are they going to be getting them from? And then, who is going to be protecting the public, and how? So I just wanted to offer that.

DR. RAUB: A question for Mr. Jacobson. You made reference to procedures to authenticate prescriptions. Would you say a bit more about that?

MR. JACOBSON: Sure. When we receive the prescription ‑‑ first of all, the patient fills out a patient profile, a medical profile. It arrives first at our office in Canada, where it is reviewed by a medical technician or a pharmacist. This is our customer support center.

We see whether there is any conflicts between what the patient has filled in as their profile and what the prescription is. If there is any conflict, our person will call the doctor in the United States and verify with them that that is in fact what has happened. It is then sent off through our system to Israel. We have a paperless system.

In Israel, every prescription must be signed off by an Israeli doctor. Again, the Israeli doctor views the patient profile, he views the prescription, sees that there is no conflicts in that case, from which it goes to our pharmacist.

In Israel, all pharmacies are licensed by the Ministry of Health. Prescriptions are only allowed to be dispensed by licensed pharmacists. The pharmacist also has the patient profile, the prescription ‑‑ also, there is a third verification that there is no mistake made in it. It is then dispensed. The patient receives it back in the United States, including a copy of the original prescription.

MR. JACOBSON: So there's three levels of security, more so than if you were to go to a Walgreens or Wal-Mart or Costco, or something like that for your prescription, where the pharmacist doesn't know you. You come in and you hand them your prescription ‑‑ that's it. Or as well the level of safety, where they take a bottle, pour it into this device, count them out.

In Israel, they're all ‑‑ there's two levels of security as well on the actual medication that they receive. The patient receives on the box the lot number and the expiring date, and on the blister pack is the lot number and the expiring date. And each pill is sealed.

All right. Mr. MacKay, how does the authentication procedure just described compare to what's required of CIPA members?

MR. MacKAY: CIPA members are like any other pharmacy in the province in Canada. All of them are, first of all, regulated by the provincial authority and licensed as such with a license number that would have to go on their website and be on all of their documentation. They receive inspections.

CIPA pharmacies, however, as members, have an extra layer of regulatory control in the form of a sworn affidavit on standards of practice that are part of the terms of license. And they are specialized to cross-border sales, with the ability for us to follow up with action if there is transgressions of the standards of practice.

We do do reviews of our pharmacies, and beyond that we're seeking out other accreditation standards. And, again, we welcome FDA involvement or state board involvement. But we've sought out, for example, an independent third party organization commission out of Vermont called IMPAC ‑‑ the Internet Mailorder Pharmacy Accreditation Commission.

We felt that we didn't want to be the fox in charge of the henhouse, so we thought we seek out an independent U.S.-based commission. And a number of our pharmacies are being accredited by IMPAC.

If VIPPS could ‑‑ I've asked Carmen if we could come to terms with this. We'd welcome VIPPS certification if we could. Unfortunately, right now, VIPPS will not certify a Canadian pharmacy that engages in cross-border practice.

DR. RAUB: But specifically, what happens with the authentication of prescriptions?

MR. MacKAY: Oh, in terms of that, I'm sorry, yes, it's almost identical. The prescription comes in from the patient, and we ‑‑ we turn it into a digital file. The patient actually gets to talk to customer service. They can talk to a pharmacist at length if they'd like.

And then actually from there it goes to the cyber clinic, where we match up all of the patient medical profile information, make sure we've got a complete picture of allergies, of drug interaction potentials, of the current medications that they're on.

We also phone back the doctor in the cyber clinic to make sure we confirm that prescription is valid and has not been altered in any way by the patient or is being put in multiple times to get multiple medications. Once we receive verification, there is actually three independent pharmacists that do a check on the prescription before it goes out the door.

So, in total, you've got the primary care physician writing the script from the United States. You've got a second pair of professional medical eyes insofar as the doctor in Canada who actually looks at the entire medical profile. They don't get paid to just sign off on a prescription. They're paid to conduct a review. And in some cases, many cases, they will flag drug interactions and be a life-saving element to the continuum of care.

We actually think that's an enhancement to the standards ‑‑ having a second doctor involved. I don't think anyone in the room here, when they go and get their prescription, has two doctors involved. And on top of that, you've got three pharmacists checking the prescription. That's a total of five medical professionals versus two, if you had acquired your medication locally and bought it at a Walgreens, for example.

MR. SACHDEV: The term "cyber clinic," so you're saying this is an online question, that this is not ‑‑

MR. MacKAY: No. Sorry. A cyber clinic is the integration between the digital information we have in the patient profile and then literally manually phoning the doctor to confirm all of that information.

MR. JACOBSON: I'm sure what the Canadians are finding is what we're finding ‑‑ that most of the people that buy medications from us are not computer literate, and we receive more requests by telephone and we mail out the forms to them and they send them back, than people going online and doing inquiries.

DR. CRAWFORD: Mr. MacArthur, you mentioned ‑‑ and I didn't quite get the import of it ‑‑ shortages have occurred. Is that as a result of parallel importing? Could you elaborate on that a little bit?

MR. MacARTHUR: Shortages have resulted as a result of attempts to stop parallel trade. We have in Europe a very competitive wholesale sector, and a wholesaler that didn't supply his own market nationally or regionally would soon be out of business, because there are contracts between pharmacies and wholesalers. So if a pharmacist couldn't get any stock because that wholesaler has exported it, he would switch to another wholesaler, perhaps permanently.

This is also enforced in law in more than half of the members states in the so-called public service obligation. They are required by law ‑‑ every wholesaler ‑‑ to stock a full range or 95 percent of all the products on the market and deliver this within a certain timeframe to all of their customers.

And even in markets like the UK where it is not in law, there is a code of conduct for wholesalers. So wholesalers supply their local market first. Period. Parallel trade is only with certain stock, but quotas sadly have been enforced so rigorously.

I mean, you know, we have cases of wholesalers' premises being burnt down and trying to get replacement stock and this being refused. We've had a case in Italy of a major wholesaler suffering a strike ‑‑ industrial action ‑‑ and obviously not being able to service his customers. A competitor wanting to move into that territory couldn't get any more stock ‑‑ supply.

In Greece, we had, after Glaxo so-called improved its distribution system by going direct, purely to obstruct parallel trade ‑‑ a lot of the islands were not supplied with essential drugs, including noticeably it picked up Lamictal, an anti-epileptic, and that had serious or potentially serious therapeutic consequences.

So we would argue that parallel trade ‑‑ parallel exporting specifically doesn't lead to shortages, but, sadly, attempts in Greece and Spain specifically to stop parallel trade have led to shortages.

Mr. MacKay, do your members export to other countries than the United States ‑‑ countries other than the United States?

SURGEON GENERAL CARMONA: Questions, comments, from any of the other task force members? None?

Okay. Then, let me just wrap it up. I want to thank all of the presenters for being with us today. This concludes our sixth and final scheduled listening session.

Since Secretary Thompson announced the creation of this importation task force on March 16th, we've heard from consumer groups, individuals in the pharmaceutical industry, international and academic perspectives, health care purchasers, professional and medical groups, and members of the public.

According to my count, we've heard from 101 presenters representing a number of views, opinions, and ideas. In addition, we have received information through our public docket.

Just as a reminder, any individual or organization can continue to submit information to the public docket through our website at www.hhs.gov\importtaskforce until June 1st. After all of that information is collected and compiled, the task force will engage in the challenging duty of writing the report for Secretary Thompson.

We've heard a number of different perspectives in this important public debate, and I believe that we have been well served by the members of the community as a whole in providing us with the best information available.

When he created this task force, Secretary Thompson called on us to consider how and if drug importation could be conducted safely, and its potential impact on the health of American patients, including on medical costs and the development of new medicines.

While we share the goal of increasing access to prescription drugs for those who need them, indeed our report cannot just consider the short-term cost impact of allowing importation. We must look at the implications of any policy decision with regard to safety and efficacy of the drugs, the potential long-term benefits and consequences to research, the effect on the national, international, and global economies, all while taking into consideration the total supply of medicines.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 requires us to report to the Secretary by the fall of this year. However, Secretary Thompson has asked that we expedite our work and share with him our findings as soon as possible.

I look forward to working with my colleagues on the task force in assessing the information that we have received and drafting a report based on the best scientific information available that serves the public health of all Americans.

In closing, I would like to thank all of the members of the task force and the task force staff for their commitment and effort during their service thus far, and rest assured there will be more service to come.

(Whereupon, at 4:32 p.m., the proceedings in the foregoing matter were adjourned.)

The information on this page is archived and provided for reference purposes only.

United States of America Health ond Human Services Importation Task Force Stakeholder Meeting

Friday, May 14, 2004

United States of America
Health ond Human Services
Importation Task Force
Stakeholder Meeting