With price controls on patented pharmaceuticals in Canada and a favourable exchange rate, drug prices in Canada may be up 50 to 70% cheaper than in the US. American consumers, including some state and municipal governments, are therefore increasingly
looking to Canada for cheaper pharmaceuticals. Now, with the proliferation of Canadian Internet pharmacies, these medications are readily available, as evidenced by significant annual sales estimated at $500 million to $1 billion. Such sales raise
a number of ethical and legal concerns primarily relating to the safety of US consumers, including that Canadian physicians are co-signing prescriptions for patients that they have not seen and many of these drugs have not been approved in the US.
Efforts that may limit sales of prescription pharmaceuticals to US consumers via Canadian-based Internet pharmacies include the following:
1. The sale in Canada of pharmaceuticals with formulations, packaging, appearance, brand
names, and labelling in Canada that differ from those in the US, has the potential to assist in three ways.
(a) The sale of non Food and Drug Administration (FDA)-approved formulations in Canada may assist in enforcement under the Food, Drug and Cosmetic Act as it is illegal to import non FDA-approved drugs. While there is a personal use exemption, the FDA’s position is that foreign versions of US approved drugs are not covered.
(b) US trademark law may prevent the parallel importation of “grey market” goods where there are material differences between the imported and domestic products and this difference is likely to deceive or confuse the public.
(c) Such differences make it obvious to the consumer that the product is not the same as the consumer has received in the US. This may lead the consumer to re-consider such purchases.
2. Domestic ownership of trademark registrations may assist in an argument based on grey marketing, as any importation and sale of materially differing grey market goods without the domestic owner’s consent may be an infringement, possibly
without regard to affiliation between the trademark holders.
3. The limiting of sales of pharmaceuticals by manufacturers to Internet pharmacies is the most direct method of control. This approach has been preliminarily considered
by the Competition Bureau in Canada and found to be justified, on the basis of the FDA’s submission that the importation of pharmaceuticals into the US is illegal. However, Internet pharmacies can also obtain product from sources downstream
from the manufacturer.
4. Health care professional associations may assist in limiting the participation of their members, whose participation is obviously necessary to support these pharmacies. The College of Physicians & Surgeons
of Ontario, the National Association of Boards of Pharmacy, and the Canadian and American Pharmacist Associations have all voiced their opposition to the practices surrounding Internet pharmacies.
5. Finally, education of the public
regarding the threat of counterfeit and contaminated drugs purchased through the Internet may encourage consumers to re-consider such purchases.
Most recently, on October 27, 2003, Health Canada voiced its concerns in a letter sent to pharmacy
and medical associations and provincial governments. In this letter, Health Canada states: “Cross-border sales of prescription drugs via the
growing practice of internet pharmacy also raise the potential for drug shortages domestically. Health Canada regards this as a very serious matter due to the inherent risk to Canadians’ health.” However, it is not yet known what specific
steps Health Canada will take to address these concerns.
We will continue to follow issues surrounding Internet pharmacies and report on new developments in future issues of Rx IP Update.
This article is based on a paper presented at the 2003 Pharmaceutical Trademarks Group (PTMG) Meeting in Montreal, Canada. Should you wish to obtain a copy of the complete paper, please contact Gunars
Gaikis.