OPINION
Drug Industry Steps Up Fight Against Online Pharmacies

In recent months, the pharmaceutical industry has stepped up its fight against online pharmacies on three fronts: First, it is strongly lobbying governments on all sides including those of the U.S. and Canada; second, it is teaming up with companies in other industries to mount indirect campaigns against online pharmacies; and third, it is exploring technology to counter the movement of pharmaceutical products across borders that forms the backbone of the online pharmaceutical industry.

On the lobbying front, the U.S. pharmaceutical industry recently mounted a multi-million dollar campaign to prevent importation of prescription drugs from Canada. Included in this campaign has been the enlistment of a former U.S. ambassador to Canada, Gordon Giffin, who has lobbied Canada's various health-related government agencies on behalf of the Pharmaceutical Research and Manufacturers of America, the main trade industry association for the pharmaceutical industry in the U.S.

Lawsuits Filed

Some reports have gone as far as stating that the U.S. President himself lobbied the Canadian Prime Minister on his last visit to Canada. Whether accurate or not, the industry lobbying seems to be having some effect in that authorities in Canada are considering new restrictions on Internet pharmacies.

On a second front, Pfizer, the largest pharmaceutical company in the world, recently teamed up with Microsoft (Nasdaq: MSFT), whereby the companies filed several lawsuits against Internet pharmacies and spammers.

Although most of the defendants were targeted by only one lawsuit, two online sites, namely CanadianPharmacy and E-PharmacyDirect, were the subject of lawsuits by both companies.

In its lawsuits, Pfizer states its concerns about the safety of the advertised products and alleges that the defendants are selling unapproved drugs, namely Viagra, to U.S. citizens. On the other hand, Microsoft's lawsuits are more concerned with the defendants' use of spam as a method of advertising.

Lawyers for both Microsoft and Pfizer admit that the evidence is inconclusive as to whether the operations are even based in Canada. However, as has been common place in similar lawsuits, the suits have been filed against unnamed defendants.

RFID Technology

This standard practice in fighting spammers allows the plaintiff to subpoena records from credit card companies and ISPs to determine the identity of the spammers and drug merchants.

Aaron Kornblaum, the lawyer for Microsoft, has indicated that spam messages were traced back to a network of mailers. In addition, he suggested that the connection to the online pharmacies in Canada was tenuous as the drugs appeared to be manufactured in India and shipped to buyers in the United States.

Although the evidence linking these two online drug merchants to Canadian online pharmacies is thin, there are indications that the operators of the CanadianPharmacy site are situated in Montreal, Quebec.

On a third front, a number of pharmaceutical companies are seriously exploring the use of radio frequency identification (RFID) technology to track and control the movement of prescription drugs. The public reasons being given for using this technology are the usual ones, such as improvements in quality control, supply chain management and customer service.

However, a side effect of such use of RFID would be that the pharmaceutical industry could seriously undermine the movement of products across jurisdictions where there is a discrepancy between prices for prescription drugs, such as is the case in the U.S. and Canada.

These efforts by the pharmaceutical industry seem to be in response to a growing trend to accept and regulate online pharmacies in a number of jurisdictions.

New Regulations

For example, in Manitoba, the province in Canada where most Canadian online pharmacies are based, the Manitoba Pharmaceutical Association is planning to amend its regulations in order to accommodate and regulate Internet pharmacies, following discussions between the regulator and Canada's largest provincial group of online pharmacies. The anticipated amendments would implement stricter standards for Internet pharmacies and exempt them from the requirement that a Canadian doctor see a patient before writing a prescription.

In the U.K., the English government has approved the operation of Internet-only pharmacies in principle, without the requirement of the existence of a physical pharmacy.

These recent efforts by the pharmaceutical industry can be interpreted in one of two ways: either the industry has finally seen the light that online pharmacies are here to stay and, as such, it has decided to contribute in a meaningful manner by getting involved in the regulation of online pharmacies; or that it is mounting a final fight to achieve its untenable objective of destroying cross-border online pharmacies.

Most likely, the industry is motivated by the latter but acutely cognizant of the former.