BUSINESS

Drug sites peter out

Online pharmacies were booming last year, but the good times are over

NANCY MACDONALD October 30 2006
BUSINESS

Drug sites peter out

Online pharmacies were booming last year, but the good times are over

NANCY MACDONALD October 30 2006

Drug sites peter out

BUSINESS

Online pharmacies were booming last year, but the good times are over

NANCY MACDONALD

The hue and cry sparked by the boom in Canadian online pharmacies a year ago has faded to a whimper, echoing the decline of the industry itself. In an election year U-turn, U.S. customs officials have announced they will stop seizing prescription drugs mailed to the U.S. from Canada—scrapping a controversial ll-month old policy. The reversal, by the Department of Homeland Security, has some in the struggling Canadian industry hoping for a resurgence. But a sharp decline in cross-border orders over the past year has some convinced that the online drug industry is a spent force.

Last November, the Bush administration launched a crackdown on the trade in discounted drugs being ferried across the border to more than a million American customers. Pharmaceutical companies had complained about Canadian drugs flooding the market at a rate of $1 billion per year. Widespread seizures, combined with the introduction of the new U.S. Medicare program, making U.S. drugs more affordable for many seniors, led to a 30 per cent drop in the cross-border trade, according to the Canadian International Pharmacy Association. The robust Canadian dollar further compounded industry woes.

“The U.S. government did a really good job of scaring consumers,” says Ramy Attalia, director of communications at Adv-Care Pharmacy, a Markham, Ont.-based operation whose business, he says, was halved under the combined stress of the new Medicare drug insurance benefit and the stronger dollar. Widespread layoffs and shutdowns have been the result. In Manitoba, where three-quarters of the Net pharmacy industry is based, the number of CIPA members has dropped to 11, from 30 in 2004. Industry-wide, an estimated 1,000 jobs have disappeared.

Attalia is hoping the end of the customs crackdown will trigger a surge in business, but Jason Kmet, a Calgary pharmacist who edits the blog Canada Pharmacy News, is less optimistic. Our dollar remains high, while many former customers now prefer to use the Medicare drug benefit, he says. And drug companies continue to deny supplies to online retailers, forcing them to have partners as far away as New Zealand fill prescriptions. M