GlaxoSmithKline May Stop Sales to Canada

by THERESA AGOVINO, AP Business Writer

NEW YORK - Responding to the growing popularity of cheaper Canadian drugs among U.S. consumers, GlaxoSmithKline is threatening to stop supplying wholesalers and retailers in that country unless they cease their cross-border sales.

Glaxo is the first major U.S. drug maker to take such action. Some Canadian companies were angered by the warning.

"I think this is outrageous and draconian. It is international blackmail," said Laurie Gauthier, operations manager of Prairie Supply, a wholesaler in Calgary.

For years, some U.S. citizens — particularly the elderly who lived near the border — have taken their prescriptions to be filled in Canada, where drug prices are kept significantly lower by government regulation. Some groups even organized regular bus trips.

Pharmaceutical companies did not appear overly worried — until the activity spread nationwide through the Internet and storefronts began opening up in some U.S. cities, offering to arrange shipment of prescriptions.

In a letters sent earlier this month to wholesalers and some pharmacies, Glaxo said it would stop supplying drugs by Jan. 21 to those who knowingly sell to U.S. customers. It asked for proof that the selling had stopped.

The letter said the company feared drugs could be harmed in the shipping process and that Americans buying drugs in Canada weren't being properly supervised by doctors.

Glaxo spokeswoman Mary Anne Rhyne says the move isn't designed to deprive patients of drugs. She also contended that it was not motivated by any concern of losing more profitable sales of drugs in the United States.

"This is a very big issue and safely is a genuine concern," said Rhyne.

Gauthier said he wasn't sure yet whether he would comply with Glaxo's demand, which he saw as financially driven.

"Glaxo would rather sell their drugs in America because they cost more in America," he said.

A congressman from one border state, U.S. Rep. Bernie Sanders, an independent from Vermont, condemned Glaxo's move.

"This seriously jeopardizes the health and well-being of thousands of Americans," Sanders said. He said Canada's pharmaceutical industry was well-regulated and that purchases there by U.S. citizens had been going on for years without problems.

He said he will introduce legislation to try to stop Glaxo after Congress reconvenes, which is past Glaxo's deadline. His office planned to contact the drug maker on Monday to ask them to reconsider.

Sanders said he feared other pharmaceutical companies would take the same step.

A spokesman for Pfizer Inc., the world's largest drug company, said it had no plans for any similar warning.

Gauthier said that, over the past few months, he has received several letters from other pharmaceutical companies saying their products weren't intended for export but none threatened to cut off supply.

GlaxoSmithKline's plans upset Carol Jackson, a retired baker in Montezuma, Kan., who buys three drugs, including Glaxo anti-inflammatory Relafen, through www.crossborderpharmacy.com.

"I feel like the drug companies are trying to hold me hostage," she said. "I think it is my constitutional right to go out and find the lowest price I can, and how they are taking that away from me."

She says she and her husband live on a strict, limited budget funded through Social Security (news - web sites) and pensions. And while buying drugs is a struggle, they still earn too much to qualify for assistance programs.

"Glaxo's move is going to hurt a lot of people," Jackson said.