SPECIAL REPORT: ELECTION '04 -- HEALTH CARE
A Primer on Drug "Reimporting"
How's it done? Is it legal? Safe? Why do drug companies object? Here are the answers to many questions swirling around the practice

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You don't have to be an accomplished cybersurfer to know that plenty of Internet operations do a brisk trade selling drugs. And it's not just Viagra, Oxycontin, and steroids that are being peddled online. Many legitimate Web pharmacies have evolved into popular money-saving options for retirees, state and city workers, and the uninsured who need prescription drugs.


One of the industry's fastest growing segments is so-called reimportation sites, which allow people to buy essential pharmaceuticals at lower prices from foreign countries. By some estimates, this year Americans will buy more than $1 billion in drugs from pharmacies in Canada alone. And sales from Canadian pharmacies account for only 20% of all reimported drugs.

The issue has become a political hot button. While federal and state regulators watch growing online pharmacy sales warily, politicians from both parties are listening to their constituents, many of whom are angry at Big Pharma over high drugs prices in the U.S., where much of the industry's revenue comes from. Instead of siding with regulators, several members of Congress have introduced bills that would ease restrictions on reimportation.

Some lawmakers are even providing lists of Web sites and other programs that will connect people to non-U.S. pharmacies. In its defense, the drug industry contends that high prices in the U.S. are necessary to pay for research into new drugs.

Here's a look at the status of cross-border buying and selling of prescription drugs, and the controversy over the issue:

What is reimportation, exactly?
The way the drug market works, big pharmaceutical companies make the bulk of their profits by selling drugs at higher prices in the U.S. to a wealthier customer base. In recent years, however, reimportation has revealed a major crack in the U.S. health-care system. Millions of Americans can't afford the out-of-pocket cost of prescription drugs (43 million have no health insurance, according to the 2000 U.S. census). So, many have resorted to buying their medicines from outfits in foreign countries, which typically charge prices that are between 30% and 70% lower than in the U.S.

How many people are doing it?
The practice has become quite widespread. Market researcher IMS Health estimates that $695 million worth of drugs were bought in Canada alone in 2003, up from $414 million in 2002. The rise of the Internet in the late 1990s made buying drugs from abroad easier. At first, people seeking painkillers and "lifestyle" drugs like Viagra were the main buyers. In the last several years, however, more and more people have flocked to sites that promise lower prices for drugs to treat chronic conditions.

How does one go about reimporting?
Today, the predominant method has become ordering through Web sites or storefronts, which often, but not always, require patients to fax a copy of a physician's prescription. Of course, it's hard to know for certain what happens once the order leaves the fax machine, but many sites promise that licensed pharmacists in their country then check that the prescription is legit. After a money-order or credit-card payment for the drug and shipping fees is received, the prescription usually arrives on your doorstep within a few days.

Even with the Internet, many people still physically travel to foreign countries to buy prescription drugs on the cheap, however.

Is reimporting safe?
That's hard to say. The FDA has been consistent in saying that people shouldn't do it. Bill Hubbard, the agency's associate commissioner for policy and planning, points out that the FDA "can't stand behind those drugs" since it can't track where they've been or how they are stored. Still, reported cases of harm caused by prescriptions filled abroad are "fairly limited," Hubbard admits. "We have no mechanism to know how many people are being harmed. We don't expect people to drop dead, but we would expect diseases are not being properly treated."

Is it legal?
It's legal for individuals to personally import a drug supply of less than three months for their own use (the "personal-use exemption" that many of the U.S. storefronts and Canadian phamacies are exploiting).

Otherwise, it's illegal for Americans to buy drugs that are not manufactured at an FDA-approved facility. (Proponents of reimporting point out that drugs bought through pharmacies in certain countries, particularly Canada, were likely made in government-inspected facilities.) However, the FDA has done little to enforce the law. "We have never attempted to arrest or take away drugs from anyone," Hubbard says. The same is true of any packages sent through the mail.

Still, the agency has been vigorously going after commercial operators. Late last year, the FDA shut down Rx Depot, a popular Oklahoma-based Internet pharmacy that helped people get prescriptions filled from Canada. The FDA is also talking to package carriers like FedEx (FDX ) and to credit-card companies about how they might help in tracking large amounts of prescription-drug imports from Canada.

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