COVER STORY

UH-OH, CANADA!

U.S. regulators target the new gold rush—prescription drug imports from across the border

For an illegal practice, drug importation from Canada has taken on all the trappings of a thriving, legitimate pharmacy business: big-time advertising, press releases bragging about exploding growth, high pharmacist salaries, and even insurance plan coverage.

Indeed, more than one million Americans, mostly hard-pressed seniors, are entrusting their money and their health to Canadian Internet-based mail-order pharmacies dispensing medications on the cheap to the tune of an estimated $1.4 billion this year. The business is growing so fast that one operation reportedly went from zero credit card transactions to $30 million six to eight months later. It's not hard to figure out how the operations cash in. For example, the Ontario newspaper National Post reported that one Web site listed the U.S. price of Pravachol at $370, compared with its list price of $166. However, at retail, it costs Canadians about $37.

The north-of-the-border outfits have forged ties with dozens of U.S. storefront brokerages that shuffle paper. The agents take in prescriptions, collect patient profiles, and secure a waiver of liability and a limited power of attorney. They often return the script to the patient and then fax the information off to the mail-order pharmacies in return for a cut of the cost of the drugs.

The cross-border partners are raking in enough dough to thumb their noses at the law and are now enticing U.S. pharmacists with hefty referral fees that outstrip the usual paltry third-party reimbursement. And elected officials in the United States are trying to make political hay by championing Granny's right to import meds even if it means flouting the nation's drug laws.

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