Schenectady County, N.Y., is on track to pay 20 percent less on prescription drugs for its employees this year than in 2003.
Flagler County, Fla., expects to save nearly $200,000 in 2017 on brand-name medicines for its 800 workers, thanks to drug costs that have fallen 10 percent since 2016.
Kokomo, Ind., has found a way to save so much money buying drugs that it offers employees a free 90-day supply of certain popular medications.
While the nation grapples with soaring drug prices, dozens of cities, counties and school districts have found a solution they say protects their budgets and saves workers money: They are helping employees buy medicines from Canada and overseas, where prices are up to 80 percent cheaper.
“We love it. . . . It’s a win-win,” said Anita Stoker, benefits and wellness manager for Flagler County, which has a program enabling its employees to get drugs from pharmacies in Canada, Britain, Australia and New Zealand.
The number of municipalities offering this benefit is growing, even though the Food and Drug Administration considers such drug importation to be illegal and this fall began stepping up enforcement against storefronts advertising the same service. In October it raided nine central Florida locations that helped a mostly senior population order drugs from pharmacies in other countries. Investigators warned the stores’ owners that they were operating illegally and could face fines or jail time.
Yet the agency has not made any concerted move to shut down these stores, which first opened in 2003, or the municipal programs, which mostly launched in the past few years.
“The FDA does not comment on its compliance or enforcement strategy regarding specific FDA-regulated products,” a spokesman said when asked about the programs. “When noncompliance with FDA regulations is found, the agency may take, and has taken, a variety of advisory, administrative and judicial actions depending on the violations identified.”
Millions of Americans have bought prescriptions from outside the United States by driving to Mexico or Canada, using the Internet or shopping at stores that assist with purchases, according to recent surveys. The FDA does not prosecute consumers for doing so, although their packages can be intercepted at the border as contraband and the contents returned or destroyed.
Congress has repeatedly passed legislation legalizing the importation of prescription drugs in the past 20 years, but both Democratic and Republican administrations have opted not to implement it. The FDA says importing drugs is dangerous because of the possibility that medications are counterfeit, mislabeled or otherwise unsafe — a view vigorously supported by the U.S. pharmaceutical industry.
The industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America, applauded the recent FDA raids. “We welcome the FDA’s action to crack down on drug-importation schemes,” said spokeswoman Holly Campbell.
Still, importation enjoys strong support on Capitol Hill. In a hearing last month on Alex M. Azar II’s nomination to lead the Health and Human Services Department, Sen. Rand Paul (R-Ky.) said he would oppose the former drug company executive unless Azar committed to implementing an importation plan. Told by Azar that the problem was guaranteeing safety, Paul replied: “The American people think it’s B.S. that you can’t buy drugs from Europe or from Canada or Mexico or other places.”
A growing number of city and county officials argue that their employees should have the option to buy less expensive prescription drugs and that helping them do so does not violate any laws. Their efforts mimic those of several states in the early 2000s, which briefly maintained websites to help residents buy drugs from Canada.
Drugs ordered from overseas often come with the same packaging as in the United States. CanaRx, based in Windsor, Ontario, and ElectRx, based in Detroit, say they vet pharmacies to ensure customers get the real product. Counties, cities and schools, plus an increasing number of private companies, contract with one of these businesses for online service.
Individuals cannot purchase on their own through CanaRx or ElectRx, which sell only three-month supplies and do not offer drugs available as generics in the United States.
The price savings for common medicines outside U.S. borders can be huge, since other countries negotiate prices with manufacturers or allow cheaper generic equivalents to be sold more rapidly. For example, a 90-day supply of the diabetes drug Januvia, imported from Britain, may sell for $83 — compared with $423 here. The blood thinner Xarelto costs $89 monthly when imported from Britain versus $485 a month in the United States.
Companies selling drugs from Canada and overseas say the FDA’s safety concerns are unjustified. The recent FDA raids on the Florida storefronts followed a sting operation in which undercover agents purchased medicines from overseas — all of which proved in testing to contain the ingredients matching the medicines ordered.
“The ones that we found and tested may have been [safe], but that doesn’t mean that they all were,” FDA spokeswoman Lyndsay Meyer counters. “You never know what you’re going to get or how they were stored — it’s a gamble. And importantly, it’s prohibited under federal law.”
Cities and counties that facilitate online ordering from overseas often do so on the advice of their insurance brokers. “In this day and age, when it’s common for employers to see a 20 or 30 percent annual increase in drug costs, we are seeing a negative drug trend in Flagler County — that’s unheard of,” said Sherry Bugnet, an account executive with the Bailey Group, an insurance broker in St. Augustine, Fla.
Schenectady County has worked with CanaRx for over a decade to allow employees to buy drugs overseas, saving more than $10 million during that period; prescriptions involve no co-pay if the service is used. The few times that U.S. customs officials confiscated medicines at an international mail-processing facility, CanaRx merely re-sent the shipment.
“It helps us keep our tax rate down and helps us give cost-of-living increases to employees,” said Chris Gardner, a county attorney who helped start the program. He has used it to order his own cholesterol and blood pressure prescriptions.
Encouraged by the successes elsewhere, the Pasco County, Fla., school district began offering the international pharmacy option in July to its 9,600 employees and dependents. Employees pay nothing for their first 90-day order of brand-name drugs, then $10 for each 90-day refill. About 75 workers have used the program, according to Patricia Howard, the district’s senior manager for benefits and risk.
Others in Florida soon will follow, with Sarasota and the Palm Beach county clerk of courts and comptroller set to unveil similar programs in January.
“If cities and counties have done their due diligence to ensure their employees are getting drugs from reputable sources, then there is nothing wrong with it,” said Carmen Catizone, executive director of the National Association of Boards of Pharmacy, which promotes safe pharmacy practices. “If not, they could be playing Russian roulette.”
Kaiser Health News, a nonprofit news service covering health issues, is an editorially independent program of the Kaiser Family Foundation.