Posted At Brandonsun.com

BY : Melissa Ridgen Matt Goe

Any breathing room the fall of the federal government afforded Canada's Internet pharmacy industry could slowly evaporate in early 2006 because of a new U.S. drug benefit that will compete for many of the same patients.

Observers on both sides of the border don't believe the plan will be the death knell for the $1-billion-a-year cross-border drug industry.

But on the heels of a year when the strong Canadian dollar thinned profit margins and federal Health Minister Ujjal Dosanjh weighed measures that would effectively drive the industry out of Canada, it's not exactly how mail-order druggists want to ring in 2006.

"We know in the end this is not a good thing," said David MacKay, a consultant for about 20 Internet pharmacies. "Medicare Part D will have an effect on our sales and we're bracing for it and we realize we're going to take a hit as a result of this program."

Andrew Strempler, president and CEO of Minnedosa-based online pharmacy, RxNorth.com, says it will be "business as usual" until they see some genuine effect from Medicare Part D.

"At this point it is impossible to say exactly what those effects will be," Strempler said. "The U.S. plan begins in January 2006; however, I do not anticipate knowing the full impact until after the final enrolment deadline next spring."

Strempler says RxNorth.com will continue to market to people "who are not covered by medicare" and focus on growing its global operations.

The president of the Manitoba Pharmacuetical Association, Gary Cavanagh, says that while the MPA has no official position on the new drug benefit as it relates to online drug commerce, there will be a definite impact.

"But I don't know what it will be," Cavanagh added. "At this point we have to wait and see what's going to happen."

The industry estimates the Canadian market for uninsured and underinsured Americans looking for cheap prescription drugs is capped at about two million.

But Medicare Part D gives everyone with Medicare coverage access to prescription drug coverage regardless of their income or health status for the first time in the United States.

Enrolment in the $400-billion Medicare expansion is voluntary, but MacKay says the U.S. government has said it hopes to have as many as 30 million people enrolled in the first year alone.

It operates like an insurance plan, with patients paying deductibles and premiums in exchange for more affordable medications. The Canadian International Pharmacy Association, the largest national lobby group for online pharmacists, says the industry has already plateaued because of the strong dollar and supply problems that have forced companies to refer U.S. prescriptions to foreign pharmacies — many of them in the European Union — to be filled on a commission basis.

Association president Andy Troszok says he believes Part D will help some people, but still leave Canada as a niche market for those who fall through the cracks.

One of the largest U.S. programs that refers American bargain-hunters to Internet pharmacies expects many patients to opt for a combination of Part D and Canadian drugs once they realize the U.S. plan isn't a cure-all.

"There will be combo issues going on," said Peter Wyckoff, an executive with the Minnesota Senior Federation. "But this is still a total abrogation of coverage by the government and privatization of our health-care system even more."

An estimated 14,000 patients from all 50 states are using the federation's drug website to link up with two of the largest online companies in Canada.

The U.S. Food and Drug Administration says drug importation is illegal, but it's believed no one has ever been charged for importing small quantities for personal use.

One of the FDA's main arguments against legalizing the cross-border trade has been the risk of counterfeit drugs being sold to unsuspecting Americans.

Two Canadian cases of counterfeit drug sales earlier this year highlighted the potential danger.

In Hamilton, RCMP raided King West Pharmacy last fall and charged a former part-owner with 11 offences related to the alleged sale of counterfeit heart medication, Norvasc. Police do not believe the pharmacy was shipping drugs to the United States.

However, a Toronto-area online pharmacist was accused of selling Americans bootleg drugs. His online operation has since been forced to shut down.

The Canadian Pharmacists Association says the busts highlight why the federal government should have shut down the cross-border industry long ago.

But Troszok says the cases prove the current checks and balances in the drug supply system work.

However, better regulations would ensure legitimate businesses flourish while rogues are quickly shut down.