Business

PILLS, PROFITS AND...PERILS?

Canadian on-line druggists raise controversy selling meds to Americans

DAVID SQUARE,DANYLO HAWALESHKA September 2 2002
Business

PILLS, PROFITS AND...PERILS?

Canadian on-line druggists raise controversy selling meds to Americans

DAVID SQUARE,DANYLO HAWALESHKA September 2 2002

PILLS, PROFITS AND...PERILS?

Business

Canadian on-line druggists raise controversy selling meds to Americans

DAVID SQUARE

DANYLO HAWALESHKA

DAREN JORGENSON had no thoughts of a multi-million-dollar cyberspace industry when he started selling pills on the Net two years ago. The Winnipeg pharmacist just hoped to make a few extra dollars shipping medicines to U.S. citizens who ordered on-line. “I’d heard stories about busloads of North Dakotans crossing the border to buy less expensive drugs from pharmacies in Manitoba border towns,” he says. It seemed a natural extension to offer Americans a better service—inexpensive Canadian pharmaceuticals delivered to their doors with the click of a mouse.

Today, Jorgenson says his company, CanadaMeds.com, has 180 employees in Manitoba filling 1,000 orders a day at about $400 a pop, shipped to U.S. customers in every state. Despite serious concern from the pharmacists’ and doctors’ associations in Manitoba over quality and standards, his original one-room e-pharmacy has vastly expanded—filling 10,000 sq. feet in three Winnipeg locations. It operates seven days a week, year-round, pausing only for a few public holidays. And the Manitoba controversy has simply led him to cover his provincial bets: he has opened a second operation in Calgary and plans to expand into British Columbia.

Internet pharmacies are becoming a big Canadian business. Manitoba is the centre so far, with about two dozen registered outlets, but others operate in B.C., Alberta, Ontario, Quebec and Newfoundland. Jorgenson estimates there are tens of millions of U.S. citizens looking to buy pharmaceuticals at low Canadian prices. “The American demand for drugs,” he says, “exceeded my wildest expectations.”

Hardly surprising: Americans can save as much as 90 per cent shopping in Canada, he says. The reasons: the low Canadian dollar and a federal government policy that keeps a lid on drug prices in Canada. “The U.S. is a wide-open market where multinationals charge pretty much what they want for pharmaceuticals,” says Jorgenson. As a result, many Americans,

especially elderly pensioners without drug plans, can’t afford U.S. prices.

But in buying Canadian, Americans are technically breaking their own laws. Because of concerns over quality control, the U.S. Food and Drug Administration forbids people from importing medicine without prior approval. There is, however, only so much the agency can do, according to FDA spokesman Brad Stone. “I wouldn’t characterize it as turning a blind eye,” says Stone. “What is true is we do have limited resources, and it certainly isn’t our top priority.”

North of the border, a Health Canada spokesman says the federal department has no jurisdiction over e-pharmacies— regulation is a provincial responsibility. The provincial acts governing pharmacies require that a prescription written by an American doctor be co-signed by a Canadian-licensed physician before it can be filled in Canada. So professional associations governing both pharmacists and physicians are watching the e-pharmacies’ fast growth with a wary eye.

The Manitoba government, however, fully supports the thriving business. “I’m a big fan of technology,” said Industry, Trade

Jorgenson fills about 1,000 orders a day. ‘The American demand for drugs,’ he says, ‘exceeded my wildest expectations.’

and Mines Minister MaryAnn Mihychuk after touring Jorgenson’s Winnipeg operation in June. “And this government is ready to grow this technology-driven industry.” And then there are the jobs. The e-pharmacies are providing much-needed employment in rural areas where drought and low grain prices have decimated the farm economy.

In Minnedosa, Man., a town of 2,400 people 200 km west of Winnipeg, an Internet pharmacy is the biggest employer. RxNorth.com started two years ago by listing Nicorette gum for sale on its Web site. The company now employs 160 area residents filling more than 1,000 prescriptions daily. “We’ve expanded twice and we still need more room,” says co-owner Mark Rzepka. In the small agricultural town of Stonewall, 25 km north of Winnipeg, pharmacist Marty Sexton has been inundated with job applications since announcing plans to open Aptecha.com.

Attracting pharmacists to oversee dayto-day operations and physicians to cosign prescriptions has been more problematic. The doctors who co-sign for CanadaMeds.com, says Jorgenson, are based in the U.S. and are licensed and insured in both countries—either ex-pats or Americans who studied and qualified in Canada. Other e-pharmacies operate differently. Some have co-signers within their province. Others rely on doctors in other provinces. To counter any professional qualms, the e-pharmacies offer cash incentives. Druggists have gotten signing bonuses of $20,000 and can expect salaries of up to $110,000 a year, compared with about $80,000 that retail pharmacists earn. Dr. David Corder, a family physician in Beausejour, Man., says one Winnipeg on-line firm offered him $10 a script to sign 100 prescriptions a day. “I was this close to doing it,” Corder says, “when I received a newsletter from the College of Physicians warning of severe reprimands for co-signing scripts.”

Those who order on-line must fill out an exhaustive questionnaire about their medical histories. But Dr. William Pope, registrar of the College of Physicians and Surgeons of Manitoba, argues that with no face-to-face contact between the co-signing doctor and the U.S. patient, Internet drug delivery is breaching the college’s standards of practice. Furthermore, the Canadian Medical Protective Association, which defends the vast majority of Canada’s doctors against malpractice suits, takes

a dim view of co-signers. “If they’re rubberstamping a prescription that is written by someone else,” says association spokeswoman Barbara Wilson, “there is a risk if there’s an adverse reaction and they are sued. We’d have to very carefully look at that before deciding to defend, and likely would not do so.”

As for druggists, Ronald Guse, registrar of the Manitoba Pharmaceutical Association, says he is concerned because Net-

based dispensers cannot discuss the medication with patients in person. Some e-pharmacists accuse Guse of being on a personal mission to shut down their industry. But he maintains that his goal is to develop consistent standards of patient care. “I’m not saying Internet pharmacies can’t exist,” says Guse. “I’m saying they need to be properly regulated.”

Jorgenson insists that the industry, aware of its association’s concerns, is already well regulated. “We adhere strictly to a ninepoint policy for Internet pharmacies operating in Manitoba written by Ron Guse and his council,” says Jorgenson. The bulk of his sales are for managing disease states such as cancer, diabetes and high blood pressure, he says, and the company never sells abusable drugs such as morphine and codeine. Guse knows that, Jorgenson adds, because for a while he was visiting CanadaMeds.com seven days a week to ensure there were enough pharmacists on duty to check prescriptions for accuracy. “Ron has threatened us with immediate closure if he finds us in breach of code,” says Jorgenson. “Last time I looked we were still in business.”

Jorgenson, meanwhile, is taking his own steps to develop standards in the U.S. In June, he co-chaired a Washington meeting of the North American Pharmacy Accreditation Commission attended by Sen. Bill Frist of Tennessee, who is a physician. Jorgenson says the commission wants guidelines to ensure that Americans receive approved drugs prescribed by licensed physicians when they order from Canadian e-pharmacies.

In Canada, the National Association of Pharmacy Regulatory Authorities worries that its pharmacists are helping to break U.S. laws. Executive director Barbara Wells says her organization plans to cohost a conference with Health Canada this fall to address concerns. A major one is whether the on-line businesses will have a negative impact on Canadian drug pricing and availability. “If this continues to grow, we’ve wondered how long there’ll be such a difference in price allowed between Canada and the U.S.,” says Wells. “I’m sure if I was in the drug industry, I’d be pretty upset.” For now, though, Canadian drugs will continue to flood southvery profitably. “We’re in this,” declares Jorgenson, “for the long term.”