Canadian-Drug Plan Stalled by Legal Risk

A proposal that Orange County employees buy name-brand prescription drugs from Canada at a discount has been stalled by concerns that the county could be sued by the federal government.

Supervisors were set to consider the proposal Tuesday, but board member Chuck Smith asked for a two-week postponement, until his last meeting before retiring. He said in an interview that he hoped to convince enough of his colleagues that his plan is defensible.

If supervisors act on Smith’s proposal, Orange County would become the first California county to allow employees to purchase drugs more cheaply from foreign pharmacies.

Smith said he remained undaunted by County Counsel Benjamin P. de Mayo’s warning against adopting a program that could expose the county to legal action by the U.S. Food and Drug Administration. The FDA has ruled that importing drugs -- except for small amounts for personal use -- through other countries violates federal law.

“I don’t want to keep hearing that we can’t do it; I want to hear how we can do it,” said Smith, who traveled to Temple, Texas, in September to tour a small prescription-drug processing company that provides medicines via Canada to several U.S. cities.

Seven states and five cities have begun or have announced plans to import drugs from Canada for their government workers as a way to reduce costs, according to a report by the county Health Care Agency.

Federal officials have announced they will not interfere with individuals buying small amounts of drugs from Canadian pharmacies for their own use, the county report said.

Smith said his research suggested the county could save $1 million a year buying name-brand drugs through Canada. The same amount could be saved by employees, who wouldn’t be charged the usual 20% co-payment if they purchased the lower-priced drugs from Canada.

Canadian pharmacy standards are comparable to those in the U.S., the Health Care Agency report said. Name-brand prescriptions can be filled for 40% less than the average cost in the U.S. An estimated 1 million people import drugs from Canada, the county report said.

The county agency proposed guidelines for using Canadian pharmacies, including making it voluntary for employees to buy directly from a list of pharmacies developed by the county, with receipts sent to the county for reimbursement.

Employees and retirees would be restricted to purchasing medicines that have been previously filled in the U.S. and taken without adverse effects, and only from a county-approved list of drugs, under the county Health Care Agency’s proposed guidelines.