San Diego Business Journal, March 2, 2006

Some local life science leaders recently called for Gov. Arnold Schwarzenegger to rethink his proposal to legalize importation of prescription drugs.

They fear it would stifle innovation and raise intellectual property and patient safety concerns.

Consumers concerned about the increasing cost of prescription drugs should take advantage of generic versions, they say, and plans such as the recently available Medicare Part D prescription benefit, which offers drug discounts to varying degrees for beneficiaries.

Schwarzenegger called this month for Congress to demand that other countries stop using price controls on prescription drugs and allow U.S. citizens to purchase them from countries that agree.

Stephen Chang is president of two local biotechs--MultiCell Technologies, Inc., which works on therapeutic protein production and treatment of liver disease, and Astral Therapeutics, Inc., a startup focusing on therapies for diabetes and other autoimmune diseases.

Chang, who is also president of Californians United for Research Economic Development and Saving Lives, or CURES, said access to prescription drugs is "a basic principle."

Political Maneuver?

He blames political scheming for lack of a better plan.

Schwarzenegger has shot down several attempts by Democrats to ease Californians' access to prescription drugs from other countries, and some Democratic leaders are saying the governor's recent proposal is a ploy to gain middle ground for his upcoming re-election campaign.

Schwarzenegger vetoed four related bills last year, including one that would have created a Web site that would have directed Californians to legitimate pharmacies in Canada, Great Britain and Ireland. He said at the time that the state would be violating federal law with the measures, and that they could jeopardize patient safety.

"We're asking for leadership and not policy," said Chang, who added that Medicare Part D should offer some relief from rising prescription drug costs for consumers.

Dr. Robert Hertzka, past president of the California Medical Association and an anesthesiologist for Sharp HealthCare, said the biotechs are overreacting. He sees drug importation as a non-issue and political stunt by the governor.

Hertzka said allowing drug imports probably wouldn't cause that much of a stir, adding that pharmacies in Canada don't have the supply to provide for a large number of patients anyway.

Yet Hertzka admitted, "It's not a challenge to copy this stuff. (Biotechs) are worried about what could happen with regard to patents."

Still, he said in all the meetings he attends with health policy leaders, the topic of drug importation has not surfaced.

"If there was really money to be saved (by allowing drug importation), the health plans would be out front, and I haven't heard a single health plan," Hertzka said.

A Generic Approach

Jack Lief, the chief executive officer of Arena Pharmaceuticals, Inc., which is developing a drug to treat obesity, called the proposal a "quick fix," and said he was concerned about drug safety. He said more consumers should look to generics if they think prescription drugs are too expensive.

"We should not import medicine from countries with lower quality medicine than our own," Lief said.

Peter Pitts, senior fellow in health care studies at the Pacific Research Institute, a free market think tank, said Americans are unnecessarily leery of generic drugs.

"Some people don't feel confident that non-brand name drugs can get the job done--they can," he said. "'Have confidence in American FDA approved drugs. In other places they are not the same quality."

Pitts and some local biotech executives agree that drug importation is a federal issue, not one the state should have to face alone.

But several states and cities have taken matters into their own hands--including Kansas, Illinois, Minnesota, Missouri, New Hampshire, Wisconsin, Boston and Portland, Maine by creating programs that assist residents in buying prescription medicines online, according to the Consumers Union, which publishes Consumer Reports magazine.

Blame Canada?

"This is about drugs coming over the Internet," Pitts said. "Most of the drugs from Canada shops aren't to countries where it's legal for them to ship."

In 2004, about 2 million Americans bought medicine from Canadian pharmacies by phone, fax or through the Internet, according to Consumers Union. The number was up 33 percent from 2003.

Buying drugs from other countries--through whatever medium--violates the Federal Food, Drug and Cosmetic Act.

Part of the governor's proposal says the federal government should"vigorously support those pharmaceutical and biotech companies who refuse to sell their products to countries imposing price controls."

Schwarzenegger said Congress should pass legislation that allows Americans to import drugs from other nations "in a matter that protects patient safety and respects intellectual property rights."

Randall Woods is the president and CEO of NovaCardia, a company working on cardiovascular drugs. Woods also spent 20 years at Eli Lilly & Co. working in sales and marketing positions.

"We strongly believe the governor should rethink his position on this," Woods said. "You discourage pharmaceutical companies from participating in research and development. That's a huge part of this state's economy.'"

Steve Brozak, a New York-based biotech analyst with San Diego-based WBB Securities, called the pharmaceutical system in the world today"archaic."

"We're supporting cheap drugs in the rest of the world," Brozak said. "(The governor's proposal) is a stopgap measure that, taken by itself, will give solace to states, but will be detrimental in the longrun."

Brozak said pharmaceutical companies spend far too much money on marketing, and that it is a significant reason medicine is so expensive.

"Novel discovery is one thing, but large pharmaceutical companies have focused up to this point on promoting drugs into blockbuster status," he said. "And it wasn't always the right thing to do."