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Industry Issue: Importation/Reimportation of Drugs By Marv Shepherd, Ph.D. Director Center for Pharmacoeconomic Studies College of Pharmacy University of Texas Austin, TX 78712 Email: Introduction First an overview of the extent of drug importation.

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industry issue importation reimportation of drugs

Industry Issue: Importation/Reimportation of Drugs


Marv Shepherd, Ph.D.


Center for Pharmacoeconomic Studies

College of Pharmacy

University of Texas

Austin, TX 78712


  • First an overview of the extent of drug importation.
  • Threats of product integrity from imported drugs.
  • Overview of counterfeit drugs.
  • Why people procure imported drugs.
  • Vulnerability points of the US drug distribution system.
  • Canadian Drug Market
  • Political realities


  • Bringing prescription drug products into the U.S. from Mexico and Canada has been going on for decades, if not centuries.
  • With the easy access to Internet pharmacies, the problem of drug importation continues to grow at enormous proportions.
myth 1
Myth # 1

“It is legal to personally import drugs into the U.S.”

Drug importation is illegal!
  • The only groups which can import drug products are pharmaceutical manufacturers. Personal drug importation is illegal.
  • However, FDA has allowed some variances.
myth 2
Myth # 2

“Drug importation is a one dimensional issue. It purely an economic issue!”

Drug importation is not just a one dimensional issue! It is a very complicated issue.
  • The problem has many fronts. There are political issues, financial issues, economic/competition issues, international trade concerns, legal and liability concerns, health care issues, plus many social issues.
For legal importation to take place it will take the understanding and cooperation from many governmental agencies, law enforcement agencies, private and public organizations, consumer groups and associations. This cooperation cannot only occur in the U.S. It requires cooperation from exporting countries.
  • Plus, it will require additional funding for FDA and U.S. Customs.
myth 3
Myth # 3

Drug importation is safe. No one has ever been hurt from imported drugs.

People have been harmed and people have died from imported drugs.
    • Some imported products contain the correct amount of active ingredients others contain no active ingredient, too little or too much.
    • Counterfeit drugs w/o active ingredients usually do not kill. It may take weeks, months or years to see the effects.
myth 4
Myth # 4

All foreign pharmacies doing business with Americans are licensed and follow U.S. laws and regulations.

There are over a thousand internet pharmacy sites worldwide offering a variety of drug products.
  • Many do follow regulations within their country but some of these regulations are weak compared to U.S. standards.
  • Many DO NOT abide by U.S. or state standards to do business with U.S. residents.
Many of these foreign pharmacy internet sites selling drugs to Americans are rogue, fraudulent sites. They pop-up one day and disappear the next. They are difficult to track and difficult to find their location.
  • Some sites are operated by felons, criminals with links to organized crime, and drug cartels.Many are not operated by pharmacists.
  • Some site dispense counterfeit, non-FDA approved drugs.
In an examination of 45 Canadian Internet pharmacy sites, 15 appeared to falsely advertise that their country of origin was Canada.
  • Investigations found the sites were from U.S., Barbados, and Mexico.
    • For example, the site is from Mexico City. (Source: Global Options)
Some sites are very deceptive. For example many sites have been found to use Canada in their domain name but the pharmacy is located in another country. was dispensing drugs out of a pharmacy in the Bahamas, when patients thought they were located in Canada.
To assure that the internet site is a legitimate, licensed pharmacy, look for the VIPPS seal on the opening screen.
  • The VIPPS (Verified Internet Pharmacy Provider Site) seal is given by the National Association of Boards of Pharmacy.
myth 5
Myth # 5

Americans are required to have a prescription to get prescription drugs from a foreign pharmacy.

For many pharmacy sites you don’t even need a prescription!!! All you need is a credit card number and address.
  • In fact, for many countries, such as Mexico, prescriptions are not necessary for many therapeutic categories of drugs.
In Canada, it is illegal to fill a prescription written by U.S. physician unless they are licensed in Canada. Canadian physicians are required to rewrite the prescription or co-signed the prescription.
    • Many Canadian health care practitioners, associations and regulators want to ban this co-signing of prescriptions. It is an unethical practice: no patient contact, no examination.
    • It has been reported that Canadian internet firms pay physicians $10.00 per Rx rewritten.
myth 6
Myth # 6

Although drug importation is a hot political issue, few drugs are coming from other countries.

extent of drug importation
Extent of Drug Importation
  • At a U.S. House Congressional open hearing (June 24, 2003), Rep. Greenwood reported that 30,000 drug packages arrive each day at the Miami international mail facility.
  • Over 10,000 parcels arrive daily at the Carson City mail facility here in California.
  • 40,000 parcels arrive daily at the JFK airport.

Each package contained chewable sildenafil (Viagra).

Many parcels contain more than one drug.


All these shipments in brown and white envelops were from Honduras, UK or Belize. All were labeled Valium. This bin is 3x4x3 feet. This is one days shipment. Miami International Mail Branch.

Fake Valium shipments


Counterfeit Valium shipments for one day—Miami International Mail Branch, March 2004.


Drugs are from all over the world. The true manufacturing site is unknown on many. Container size suggest more than 90 day personal use.

It is estimated that 20 million packages containing drugs arrive annually via international U.S. mail. This is an increase of 1000% in just two years and it continues to grow. These estimates do not include Fed Express, UPS or other delivery mechanisms.
  • The HHS Drug Importation study released in December 2004 estimates that 12 million prescriptions were sold by Canada to U.S. residents. This was approximately a $700 million transaction.
More current estimates indicate that Canadians export an estimated $1.1 billion (U.S. dollars) of drugs to U.S residents. Considering that the total Canadian drug market is just $8 to $10 billion, this constitutes a major business for Canada.
  • Mexico sells $800 million just from border farmacias.
myth 7
Myth # 7

Imported drug products are safe and effective products.


Partially true! Some drugs are of good quality some are not.

Few are FDA approved.

Problem: it is difficult to determine what is good what is bad.



What is troubling is that the vast majority of the pharmaceutical products coming into the U.S. are NOT approved by the FDA. Many are substandard products or fake products.


fda has determined that imported drug products may
FDA has determined that imported drug products may
  • Contain no active ingredient, too little or too much active ingredient.
  • Be expired or have a false expiration date.
  • Be contaminated.
  • Be stored at the wrong temperature or under unsafe conditions.
Be a counterfeit or fake medicine.
  • Be fraudulently or inadequately labeled.
  • Be a product which has been withdrawn from the market.
  • Be animal drugs not for approved human use.
  • Be inappropriately packaged.
continuation of myth 7
Continuation of Myth # 7

Imported drugs are safe and effective.


Threat of Counterfeit Pharmaceuticals





definition of counterfeit prescription drugs
Definition of Counterfeit Prescription Drugs
  • Counterfeit medication is one which is deliberately and fraudulently mislabeled with respect to identity and/or source.
  • Counterfeiting can apply to both brand and generic products.
  • Counterfeit products may include products with correct ingredients, wrong ingredients, without active ingredients, with insufficient quantities of active ingredient or with fake packaging.
trend in number of fda counterfeit drug cases
Trend in Number of FDA Counterfeit Drug Cases

Source: FDA Counterfeit Drug Report, February 2004, the 2004 figure came from Business Week, February 7, 2005.

Counterfeit drugs continue to be a growing concern. It is anticipated that the number of counterfeit drugs will continue to increase. Since 1996, 73 fake pharmaceutical cases have been opened in the U.S. Legal results show 44 arrests and 27 convictions. In 2003 there were 22 fake drug cases opened by the FDA.

Most recent counterfeit drugs found in the U.S.










Ortho Evra ®



Caution: Fake

extent of counterfeit drugs and major sources
It has been estimated by the WHO that counterfeit drugs comprise 8 percent of the world market.

For some countries (African, Latin) counterfeits comprise 40 to 50 percent of the market.

Estimated to be $20 to over a $40 billion market. (WHO)

Sources of Counterfeit Drugs

India—it is estimated at 15 to 20% drugs are fake. (Script, April 16, 2003)


Brazil (40% to 50% fake)

Mexico (25% fake)




Southeast Asia Countries (30 to 50%)

Extent of Counterfeit Drugs and Major Sources

The extent of counterfeit drugs in the U.S. has not been determined. Some commonly heard estimates are that it is less than 1%. However, with the proliferation of internet drug sites and the number of drug entering the U.S. from other countries, this estimate may be low.

Often times the counterfeit product is mixed with legitimate products to confuse investigators. The counterfeit Lipitor found in the U.S. last summer was mixed with authentic product.
    • Makes it difficult to determine the extent of counterfeiting.

Lipitor® (atorvastatin calcium)

Which one is the counterfeit Lipitor®?

Source: Pfizer Inc.


Lipitor® (atorvastatin calcium)

Which one is the counterfeit Lipitor®?



Source: Pfizer Inc.


Celebrex® (celecoxib)

Which one is the fake Celebrex®?

Source: Pfizer Inc.


Celebrex® (celecoxib)

Which one is the fake?



Source: Pfizer Inc.


Counterfeit Gabantin

Drugs purchased over the Internet by an American patient who was told that the products were manufactured in the United States and were being sold from Canada. The drugs he actually received are fake “knockoffs” from India.


Counterfeit Zantac

Manufactured in Taiwan, discovered in United Kingdom.

Excellent packaging of counterfeit, even includes counterfeit package insert.

Source: Pharmaceutical Research Manufacturers Association


Counterfeit Ponstan

Ponstan is an anti-inflammatory product. This counterfeit was found in Columbia. First is the yellow powder; it consist of boric acid, floor wax, yellow highway paint. Pressed into tablets and placed in foil packs with labeling.

Source: Pharmaceutical Manufacturer Research Association


Counterfeit Patch—no active ingredient

Authentic Ortho Evra Contraceptive Patch and packaging


Counterfeit Viagra is a worldwide problem. The University of London reported in September, 2004 that half the men buying Viagra online are getting a counterfeit drug. Many having no active ingredient, wrong active ingredient, or wrong quantity. (BBC, September 28, 2004)

Countries exporting fake Viagra are India, China, Israel, Thailand, Costa Rica, Belize, Mexico.


Viagra® (sildenafil)

Which one is the fake drug?


Viagra® (sildenafil)

Which one is the fake drug?




Manufacturing Facility for Counterfeit Panadol

This facility depicts the conditions in which many counterfeits are manufactured. This counterfeit lab was found in South East Asia.

Source: Pharmaceutical Research Manufacturers Association

recent fake drugs from alleged canadian web site
Recent Fake Drugs From Alleged Canadian Web Site
  • Counterfeit Ambien®, Viagra® and Lipitor® were found coming into the U.S.
  • All three products were so-called “generic” versions. However, none of these products have approved generic versions.
  • Tests showed that the drugs were the wrong strength, didn’t dissolve properly and contained contaminants.
Ambien® was found to be double the labeled strength listed.
  • The “generic” Lipitor® was found to be sub-potent. On average, only 57% of the active ingredient was found.
  • Some tablets of Viagra® had both too little and too much active ingredient. Viagra® failed the dissolution tests and tablets had unacceptable levels of impurities.

Source: accessed July 20, 2004

In April, it was reported that a Vancouver Internet Pharmacy operator ( )is openly selling Viagra® (Sildenafil), Cilalis® (tadalafil) and Levitra® (vardenafil) which are not approved by the Health Canada nor the U.S. FDA.
  • These counterfeit drugs were coming from Mexico.

Source: Scrip, (PJB Publications) April 9, 2004.

best pharmacist s strategy
Best Pharmacist’s Strategy
  • Know your suppliers!!!! Deal only with trustworthy reputable wholesalers. Just because a wholesaler has a license doesn’t necessarily mean they can be trusted!
  • Be careful of the“GoodDeal”. If it appears to be too good to be true, you may have a problem. Be very careful, especially if it from a new source. Due diligence is needed to check on suppliers
  • Be careful of fax and email deals.
what if you suspect something is wrong
What if you suspect something is wrong?
  • Contact FDA at
  • Or call FDA at 1-800-FDA-1088
  • Also contact the manufacturer.
myth 8
Myth # 8

The only reason people obtain their pharmaceuticals from a foreign pharmacy is to save money.

reasoning for going outside the u s
Reasoning for Going Outside the U.S.
  • The primary reason why Americans go to Canada to obtain drugs is because of the cheaper price.
  • The primary reason why Americans go to Mexico to obtain drugs is because of the cheaper price and easy access.
  • The primary reason why Americans use a foreign internet site is because of the cheaper price, easy access and convenience.
  • Other reasons are to avoid the law, obtain controlled substances without a prescription, and don’t have to see a physician to get a prescription.
One frightening thing about the open door to drug importation is the purchasing of controlled substances. Narcotics are flowing freely into this country via foreign internet sites.
  • As pointed out in a recent Washington Post series of articles on importation, when children can order controlled substances from their homes with a credit card number, without a prescription, and have drugs delivered to their home--we have a problem.
terrorist group involvement
Terrorist Group Involvement
  • Terrorist groups such as IRA, Homas, Hezbollah and Al Queda have been linked to counterfeit drug production and distribution.
    • IRA manufactured counterfeit Ivomec and other fake hormone products in Florida.
    • Hezbollah smuggled large quantities of pseudoephredrine from Canada to make methamphetamine.
    • The link between terrorists groups, organized crime, narcotic cartels and counterfeit drugs is extremely strong.
myth 9
Myth # 9

Canada can meet the prescription drug needs of U.S. residents.

canadians cannot meet u s drug demands
Canadians Cannot Meet U.S. Drug Demands
  • Canada’s population is 32 million compared the 290 million in the U.S.
  • The number of U.S. elderly are greater than the total Canadian population.
  • The Canadian drug supply would last the 38 days in the U.S.
  • To supply just half of the U.S. elderly, Canada would have increase their total annual drug supply 2.5 times.
u s demands are a threat to canadian drug supply
U.S. Demands are a Threat to Canadian Drug Supply
  • New York Times (Oct. 16, 2004) reported that many in Canada are concerned about the lack of drug supplies in Canada.
  • “It is completely untenable to think that Canada could supply their (U.S.) needs and our own for even one month let alone on an on going basis.” Canadian Treatment Action Council and Best Medicine Coalition (Globe Technology, Associated Press, Oct. 19, 2004)

In December, the Health Minister of Canada, Mr. Ujjal Dosanjh spoke out against Americans getting drugs from Canada. He stated: “We cannot be the drugstore for the United States.” Furthermore he stated, “I want to make sure that we don’t have…250 million Americans buying drugs in Canada.”

Source: Television interview, CTV Television, December 12, 2004.


Script recently reported that is now filling about half of their prescriptions with products from outside of Canada. has pharmacies in more than 30 countries, approximately 10,000 prescriptions a week are coming into the US from these foreign pharmacies.

Source: Script, World Pharmaceutical News, February 11, 2005.

myth 10
Myth # 10

All drugs for export by Canada are approved by Health Canada and manufactured in Canada.

Approximately 60% of the drugs used in Canada are imported, the remaining are manufactured in Canada. Canada imports drugs from more than 80 foreign countries. ($4.5 billion are imported, $4.4 billion manufactured, but Canadian manufacturers export $1.5 billion).
concerns about canadian drugs
Concerns About Canadian Drugs
  • Canada is on record of saying that they will NOT assure the quality of the products coming into the U.S.
  • Canadian Internet operators are on record of saying that they will obtain drugs from other sources (countries) if supplies become limited. Our research shows that Canada is importing drugs from 80 countries.

It is important to realize that under Canadian Drug Law, drugs which are intended for export may not be regulated by Health Canada. In other words, drugs which are for export by Canada do NOT have to have approval from Health Canada.

canadian food and drug act 37 1
Canadian Food and Drug Act, 37.(1)

“This act does not apply to any packaged food, drug, cosmetic or device, not manufactured for consumption in Canada and not sold for consumption in Canada, if the package is marked in distinct overprinting with the word “Export” or “Exportation” and a certificate that the package and its contents do not contravene any known requirement of the law of the country to which it is or about to be consigned has been issued in respect of the packaging and its contents in prescribed form and manner.”


This also explains why many American politicians proclaim that Canadian drugs are just as safe as U.S. drugs. They say “show me the Canadian bodies.” There will not be Canadian bodies because drugs sold in Canadian “brick and mortar” pharmacies have a different standard than some drugs sold by internet exporting companies.


To emphasize this point, papers filed in Canadian federal court late last month by has asked the judge to prevent Health Canada inspectors from visiting their facilities, calling the proposed inspection ‘invalid and unlawful” and a violation of the company’s charter rights.

Their basis is that since they do not dispense drugs to Canadians they legally cannot inspect their facilities.

Increase in Canadian Pharmaceutical Imports from Selected Countries for Drugs Packaged for Retail Use

2002 vs. 2003

  • U.S.: $1.7 billion to $2.1 billion + 23.5%
  • India $25.2m to 26.1m + 3.5%
  • China: $2.3m to $2.9m + 26.1%
  • Ecuador: $1.5m to $2.7m + 80.0%
  • Mexico: $15.8m to $25.3m + 60.1%
  • Singapore: $1.4m to $4.9m + 250 .0%

All countries: $3.7 billion to $4.7 billion + 27.0%

Source: 03/3/04

myth 11
Myth # 11

Drug importation is free trade.


Many argue, including legislators, that drug importation is a “free trade” issue.

The flaw with this argument is that countries where they want to import drugs have price controls.

This is NOT free trade.

We are importing price controls not pharmaceuticals.

We are imposing foreign price controls on American goods in a U.S. market.


Myth # 12

All drugs outside the U.S. are cheaper than U.S. drugs.

  • Generic drug products which constitute 50% of all drugs dispensed in the U.S. are cheaper in the U.S.
  • Sources exist in the U.S. to obtain lower cost pharmaceuticals, including brand name drugs without the added risk foreign drugs have.
safe saving sources
Safe Saving Sources
    • Access to 275 public and private patient assistance programs.
    • 1-800-762-4636
    • Prescription assistance program run by Express scripts
    • 1-800-769-3880
    • 10 PRMA Companies offering over 150 FDA-approved drugs
    • Savings from 20 to 40%
    • Provides links to various drug savings programs
When a patient is not progressing well on their drug regimen, possible questions you may want to ask are:
  • Where are you obtaining your prescription drugs or a specific drug?
  • Are you using a pharmacy internet provider site for your medications? What is the site?
  • Is the pharmacy site a foreign site? (Remember: sometimes it is difficult to determine.)
  • Is the patient using medications you are not aware?
if patients are using an out of country pharmacy other questions are
If patients are using an “out-of-country” pharmacy other questions are:
  • Who is monitoring the patient’s drug therapy for:
    • Drug interactions?
    • Proper drug use?
    • Inappropriate therapies?
    • Drug adherence monitoring?
  • Who does the patient call if they have drug therapy questions?
  • Who is counseling the patients on their therapies?
concerns continued
  • When patients use an out-of-country Internet provider for chronic care needs and use a local community pharmacy for acute care needs, the result is an incomplete patient drug profile.
  • The community pharmacist may not be aware of the chronic medications the patient is taking. This raises the risks of drug interactions or drug misadventures.
This raises the question of liability. What can an American do if they get hurt?
    • Is the foreign internet pharmacy provider liable?
      • Remember: patients who use Canadian sites are required to sign a waiver of their rights.
      • What are the patient’s chances in suing a pharmacy located in Pakistan, China, etc?
    • For Canada is the U.S. doctor or the Canadian doctor responsible?
    • Is the manufacturer liable?
      • Remember: the U.S. drugs sold to Canada are for Canadian use ONLY and Canada will not assure quality of the products shipped to U.S.
demand for foreign drugs continues
Demand for Foreign Drugs Continues
  • Demand for cheaper pharmaceuticals continues; people appear to be blind to the hazards-just give them cheap drugs.
  • The pressure continues to mount to legalize drug importation despite the fact that FDA and the White House say they cannot assure safety and effectiveness of foreign drug products.
conclusions from the hhs drug importation task force
Conclusions from the HHS Drug Importation Task Force

“It would be extraordinarily difficult and costly for ‘personal’ importation to be implemented in a way that ensures the safety and effectiveness of imported drugs.”

“…national savings from legalized commercial importation will likely be a small percentage (1% to 2%) of the total drug spending and developing and implementing such a program would incur significant costs and require significant additional authorities.”