Canadian Drug Distributor Targeting U.S. City, County Employees Gets FDA Warning Shot
February 28, 2019
By Thomas Burton l The Wall Street Journal
WASHINGTON—The Food and Drug Administration sent a warning letter to CanaRx, a Canadian company that makes low-cost prescription drugs available to employees of as many as 500 U.S. towns, cities and school districts.
Through the action, the FDA is venturing deeper into a debate over the high cost of prescription drugs in the U.S. The agency said that CanaRx’s “activities cause the introduction of unapproved new drugs and misbranded drugs into interstate commerce,” in violation of U.S. law.
The warning letter to the closely held company said CanaRx “contracts with public and private sector employers throughout the U.S. to provide select prescription drugs to employees.”
The import of prescription drugs is illegal in the U.S. under many circumstances, but the FDA generally doesn’t enforce that ban against individuals.
Joseph Morris, an attorney for CanaRx, said, “CanaRx is in the business of matching Americans with dispensing pharmacies” in Canada, the U.K. and Australia. He said, contrary to the wording in the FDA warning letter, the company doesn’t actually contract with the municipalities or other local agencies, but rather with individual employees of those entities.
The strategy appears to be central to CanaRx’s business model. “Founded by doctors, pharmacists and health care professionals, the goal was and is to provide safe affordable brand name maintenance medications at a reduced cost to all American residents,” according to the company’s website.
Several U.S. states have sought to legalize the import of low-cost prescription drugs from foreign suppliers, but have faced strong resistance of the U.S. pharmaceutical industry.
A growing number of cities and counties have made cheap Canadian drugs available to their employees as an employee benefit.
FDA officials see the matter as one of safety, saying they cannot ensure the purity of drugs brought into the U.S. But the issue is also of intense interest to the pharmaceutical industry, because prices in the U.S. generally far exceed those in Canada, Europe and elsewhere.
FDA Commissioner Scott Gottlieb said the agency is protecting consumers in its action.
“When companies sidestep important drug safety measures and put patient health at risk by providing unapproved drugs that have been substituted for FDA-approved prescription drugs, it’s the agency’s responsibility to step in to protect the patients,” Dr. Gottlieb said.
The online delivery of medicines from abroad is different from a situation in which a consumer “walks into a brick-and-mortar Canadian pharmacy and buys a medicine,” he said.
In that instance, he said, “they’re getting a high-quality drug because of Canada’s first-world drug regulatory process.” But in online purchases, he said, drugs could be counterfeit or expired.
Mr. Morris, the CanaRx lawyer, disputed that characterization. “We have no history of FDA complaints, and we have a 100% track record of safety,” Mr. Morris said. insert
One of the customers that has worked with CanaRx is Schenectady County, N.Y. Christopher Gardner, the county attorney, said: “We’ve saved millions and millions of dollars on this over the years.”
As the high cost of prescription drugs has become a political issue, various approaches to importation have gained more support on Capitol Hill. Sens. Bernie Sanders (I., Vt.), Cory Booker (D., N.J.) and Bob Casey (D., Pa.) support legislation that would call on the Department of Health and Human Services, including the FDA, to allow importation of medicines from certain advanced countries.
Meanwhile, Sens. Chuck Grassley (R., Iowa) and Amy Klobuchar (D., Minn.) support a bill that would allow such imported drugs for personal use.
But the FDA is adamant about the CanaRx case. “We urge employers and any enrolled employees not to use any medicines from CanaRx,” Dr. Gottlieb said. “The FDA will pursue additional enforcement actions as needed.”