City Finds a Cure for Drug Costs in Canada

Four times a day, when 13-year-old Mikey Albano injects himself with insulin from Canada to control his diabetes, his only concern is aiming the syringe.

Mikey -- the son of this city’s mayor -- knows that some people question whether the medication that comes by mail to his home in a refrigerated package might be outdated or otherwise unsafe. Mikey also has heard critics suggest his father is endangering his life to save a few pennies.

“That is just wrong,” the eighth-grader says. “And I’m living proof.”

Three months ago, Mayor Michael J. Albano launched the country’s first insurance plan that allows city workers to buy lower-cost medication from Canada. Albano and leaders of 23 unions spent nine months crafting a program to curb health-care expenses, which had more than doubled since the mayor took office in 1996.

In this medium-sized city in western Massachusetts, some of the 20,000 workers and their families are saving 30% to 90% on prescriptions because Canada’s provincial health-care systems and government regulations keep prices lower.

Though the program defies federal restrictions on pharmaceutical purchases from Canada, Springfield Meds, as the plan is known, has emerged as a model for cities and states across America.

Officials from Boston and New York City were on hand Tuesday when Albano met with a congressional delegation looking into ways to lower prescription drug costs -- and those cities immediately began considering programs to re-import drugs that U.S. companies have sold to Canadian pharmacies.

Other cities including Sacramento and Los Angeles and states such as Minnesota, Michigan and Illinois are talking about similar plans. Earlier this week, Illinois Gov. Rod Blagojevich released a study showing that Canadian pharmacies were as safe as those in the U.S. -- and sometimes even safer.

In Washington, lawmakers working on legislation to overhaul Medicare are considering a proposal that would make it legal to import U.S.-made drugs from Canada. But many governors and mayors are not waiting for Congress to act.

Massachusetts Sen. Edward M. Kennedy came to Albano’s defense when the Food and Drug Administration objected to Springfield’s program even before it took effect. “We as a nation can’t continue to tolerate double-digit inflation in the cost of prescription drugs,” Kennedy said.

Albano’s opponents -- drug companies and pharmacists, along with the FDA -- said imported drugs often failed to meet U.S. standards, and contended that mail and Internet-based delivery systems might be providing outdated drugs.

“There is a large risk for safety, and this is a very bad precedent,” FDA Associate Commissioner William Hubbard said. “Some percentage of Americans are going to be harmed if this kind of practice becomes routine -- and some probably already are being harmed.”

The mayor said he told the FDA: “Gentlemen, we are doing business with Canada. Not Iraq, not North Korea -- Canada. These are our friends.”

Before approving the program, Albano inspected the nine Ontario pharmacies that provide drugs for the mail-order house that manages Springfield Meds. The mayor was reassured by what he found, and his son became the first person in town to receive medication from Canada.

Mikey’s doctor said the boy was doing fine, the mayor said. “The Albano family is saving about $250 a year,” he said, and other families may save up to $850 a year. The annual savings to the city, he added, “conservatively will be up to $9 million” -- enough to allow him to rehire some laid-off city workers.

“I had no intention of becoming a national spokesperson for or against anything,” Albano said. “I just wanted to stabilize the city’s finances for the next few years -- and to help city employees save some money.”

Albano, a Democrat, said he was troubled last spring when cuts in state aid forced him to lay off 323 city workers, including 76 police officers and 52 firefighters. His shrinking budget was burdened by health-care costs that in six years had shot from $33 million to $67 million. Prescription costs alone soared from $9 million to $18 million in that period.

Health-care costs threatened to rise another 20% next year, Albano said. He knew he could neither change what physicians charged nor alter the prices of medical tests or hospitalization. So “we looked at the cost of prescriptions,” he said.

The mayor and his task force quickly focused northward. Congress had approved prescription drug bills that allowed re-importation of drugs from foreign countries, including Canada. Several Democratic presidential candidates have vowed to make Canadian pharmaceuticals available to U.S. citizens.

For years, Americans have gone to Canada to save money on medicines. In border states, senior citizens groups organize bus trips to Canadian pharmacies. Internet sites also allow Americans to buy drugs from Canada -- the same medication sold in the United States.

And though the practice is technically illegal, the FDA has said it would not seek the prosecution of those who buy prescription drugs in Canada.

Working with union leaders and city officials, Albano contracted with Cana-Rx Services Inc., based in Detroit and Windsor, Ontario. The company arranges for U.S. prescriptions to be reviewed by Canadian physicians, who then forward them to Canadian pharmacies. Medication is mailed to U.S. consumers. The process is similar to discount mail-order prescription services offered through insurance companies in this country.

Two months after the Springfield plan took effect, the FDA said Cana-Rx was putting “the health of the American public at risk.” FDA officials said some drugs that required refrigeration were not packed properly, some were mislabeled and some were out of date when they arrived.

G. Anthony Howard, president of Cana-Rx, did not return phone calls requesting comment on the FDA’s allegations.

But Andy Troszok, vice president of the Canadian International Pharmacists Assn., said outdated or mislabeled drugs also made their way into U.S. pharmacies.

“Not a single U.S. patient has been harmed from the Canadian system,” Troszok said. “And I don’t see Canadians dropping dead right, left and center because of tainted drugs. I just wish everyone would stop talking about the smoke screen of safety and concentrate on the real story: It’s about money.”

Canadian pharmacies operate under regulations that are “qualitatively and quantitatively no different from those in U.S. pharmacies,” said David Hill, associate dean of the University of Colorado’s school of pharmacy.

“If you walk into a pharmacy in a Safeway in California, you will find it to be very similar to the pharmacy at a Safeway in British Columbia,” said Hill, an expert on health policy and the pharmaceutical industry.

Hill said pharmaceutical companies priced drugs lower in Canada in part because the per capita income is so much lower than in the U.S. The Canadian market for pharmaceuticals represents about 2% of the worldwide market, with the United States at 35% to 40%, he said.

“Most pharmaceutical companies will accept a lower price in Canada because all their major upfront costs for marketing and research are covered by their U.S. sales,” he said.

Jeffrey Trewhitt, spokesman for Pharmaceutical Research and Manufacturers of America, said drug prices in Canada were “artificially low” because of “widespread, government-mandated price-fixing schemes.”

Trewhitt’s Washington-based trade organization represents about 90 U.S. companies, reflecting close to 90% of U.S. pharmaceutical sales. Among them is Eli Lilly & Co., which recently followed four other major pharmaceutical companies in announcing it would ship fewer drugs to Canada to prevent re-importation to the United States.

Springfield teachers union President Morris Murphy, whose wife orders her birth-control pills from Canada through Springfield Meds, dismissed suggestions that imported drugs might be hazardous.

“The drug companies keep telling us that these drugs from Canada are unsafe, but haven’t they been reading the papers? Haven’t they read about tainted drugs in places like St. Louis?” Murphy said.

In a letter to the local newspaper, Springfield nurse Gina Brengi said she had seen many patients who for financial reasons can “either eat or take their medications,” and had met husbands and wives who shared medications.

“I think it is great that Mayor Michael Albano has taken a stand against the drug companies,” Brengi wrote.

For Albano, the Springfield Meds program is both a legacy and a swan song. After 30 years in public service, the 52-year-old mayor is not seeking reelection Tuesday. He weathered an FBI corruption probe, but it was the battle with the federal government over lower-cost drugs that made him want to leave office.

“Wouldn’t you think in government, you would want to help people, not hurt them?” he asked. “That’s why I got into this business, and quite frankly, that’s why I am getting out: No one is listening anymore.”