Pfizer Is Itching To Start A Drug War With Canada
By Roger Parloff

(FORTUNE Magazine) – From the looks of it, Pfizer is gearing up for a drug showdown. In late February the No. 1 drugmaker cut off two Canadian wholesalers that it said were supplying retailers who sell to Americans. It was the most dramatic escalation to date in the raging war between Big Pharma and American seniors over the illicit practice of importing cheap prescription drugs from Canada.

Due to Canadian price regulations, brand-name pharmaceuticals are often 30% to 80% cheaper in Canada than in the U.S. (See "The New Drug War," on Though it is generally illegal, and according to the FDA unsafe, to import foreign drugs, many American politicians favor legitimizing that traffic to force down American prices. Drug manufacturers, on the other hand, claim that without higher American prices they will be unable to foot their R&D costs.

As a result of the Pfizer action, Dave MacKay, the head of a trade group of Canadian Internet pharmacies, says his members will begin running out of their Pfizer inventories within one to six months. At that point, he warns, many American seniors will find themselves unable to afford the drugs they need. Pfizer drugs--chiefly Lipitor, Celebrex, and Norvasc--currently account for about 15% to 20% of the cross-border traffic, MacKay estimates.

In a press release, Pfizer said it took the action "to protect the integrity of the pharmaceutical supply system and the supply of Pfizer products to Canadians."

Four other manufacturers--GlaxoSmithKline, AstraZeneca, Wyeth, and Eli Lilly--had also previously warned Canadian distributors against reselling to Americans, but none had yet cut a distributor off. Minnesota attorney general Mike Hatch opened a civil probe of Glaxo last April, publicly expressing his suspicion that Glaxo and the four other drugmakers are violating his state's antitrust laws by collusively boycotting Canadian distributors that resell to Americans. Glaxo has denounced his legal theory as absurd. Hatch is now awaiting a state court ruling on the enforceability of his subpoenas to Glaxo. If he wins the decision, Hatch warns, the other drugmakers should expect their own subpoenas within "nanoseconds." --Roger Parloff