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November 25, 2003

Blagojevich sends strong message to drug companies that threaten consumers by limiting supplies to Canada
Instructs state health plans to make safe alternatives available to drugs made by companies that try to close access to cheaper drugs

CHICAGO – In response to recent action taken by five major drug manufacturers to limit supplies to Canada in order to stop Americans from filling their prescriptions across the border where prices are lower, Gov. Rod R. Blagojevich today announced that Illinois will review its preferred drug list and, when safe equivalents are available, remove name-brand drugs made by companies involved in limiting supplies to Canada.
 “About a month ago, we released a report showing that if we import prescription drugs from Canada, the State of Illinois and consumers could save nearly $91 million.  And we found that importing prescription drugs from Canada is as safe, and in some cases, even safer than purchasing prescription drugs here in the United States,” Blagojevich said.  “Since then, the FDA and the big drug companies have done everything in their power to undermine our efforts. 
They have used scare tactics.  They have dispatched hundreds of lobbyists to Capitol Hill.  They have even gone so far as to limit supply to Canada.  Why?  To protect their profit margins, at the people’s expense.” 
Five major drug companies – AstraZeneca, Eli Lilly, GlaxoSmithKline, Pfizer and Wyeth – each took steps in recent months to limit supplies to Canada to curb cross-border sales.  Their action came as an increasing number of Americans are turning to Canada for affordable prescription drugs.  Recently Illinois and other states and cities announced plans to explore ways to help save money for taxpayers and consumers by buying prescription drugs from Canada where the exact same medications cost 30 percent to 50 percent less.  Illinois’ team of experts found that the state and its 230,000 employees and retirees could save a combined $91 million a year by purchasing a limited list of name-brand FDA-approved drugs from approved Canadian pharmacies.
“We are not going to sit back, watch the big drug companies use their muscle to force Americans to pay the highest prices in the world for prescription drugs, and not do anything about it.  I simply won’t let that happen,” Blagojevich said. “Starting today, we will review the products of every company that limits supply to Canada.  When the same drug is also made by a company that is not limiting supplies to Canada, we’re going to take their drugs off of our preferred list, which would give our health plan participants an incentive to buy the same drug made by another manufacturer instead,” the Governor explained.
In many cases, more than one drug is available to treat a certain illness or condition.  The Governor wants to ensure people covered by state-sponsored health programs have access to drugs made by companies that are not penalizing Americans and Canadians for trying to import lower priced medications. 
Blagojevich is instructing the Pharmacy and Therapeutics committees from 12 state-sponsored programs, which establish the list of drugs that are covered by each program, to look for alternatives to replace drugs on their formularies that are made by the five companies involved in limiting supplies to Canada.  Within 45 days, their recommendations will be forwarded to the state’s Special Advocates on Prescription Drugs who will make a final determination on which drugs to replace.
For the one non-managed care plan that serves state employees and retirees, the review could result in more alternatives being made available at the lowest co-pay level, and name-brand drugs made by companies that limit supply to Canada being removed from the preferred drug list and available at the highest applicable co-pay, currently $28 per 30-day supply.  Each of the nine managed care programs in the state employee and retiree system will be requested to take similar action.
The Departments of Corrections and Human Services each has a preferred drug list, so drugs that are removed and replaced with safe alternatives will only be covered if the prescribing physician obtains pre-approval from the health plan.
Physicians are more likely to prescribe drugs that are available on the second-tier or preferred list, so consumers under Illinois’ plans will steer away from the drugs that are removed from the list in favor of the preferred alternatives.
“While we will not do anything that threatens patient safety or increases their cost, when all things are equal, we will do everything we can to drive business away from the drug companies that are hurting the American people,” Blagojevich said.
As Americans struggle harder every year to afford prescription drugs, the companies that make drugs continue to realize record profits.  In 2002, the median profit rate for all companies in the Fortune 500 was only 3.1 percent, but the median rate for drugs companies was 17 percent.  In fact, the profits of the top ten drug companies made up more than half of all profits netted by all Fortune 500 companies combined. 
And, contrary to their claims, drug makers are not investing more in research and development, but instead are pouring money into efforts to keep prices and profits high.  Despite profits of 17 percent, drug companies spent only 14 percent on research and development of new drugs – and much of that was on developing equivalents to existing drugs, not on developing new innovative medications.  By comparison, the same companies spent nearly 31 percent of their budgets on marketing and administration.
As Americans increase the pressure on lawmakers to find new solutions for making drugs more affordable, the pharmaceutical industry has responded by significantly boosting spending on lobbying efforts in Washington, D.C, where pressure is growing for legislation to help Americans obtain lower drug prices.  According to a study by the independent organization Public Citizen, the drug industry increased spending on lobbying activities by more than 11 percent from 2001 to 2002.  The industry hired 675 lobbyists in 2002 – almost seven for every one member of the U.S. Senate. 
“The State of Illinois currently spends $2.1 billion each year on prescription drugs.  If we can shift some of that spending away from the drug companies who are limiting supplies to Canada, the drug companies will start to feel it.  If other states join us, they’ll feel it even more.  In fact, I am sending a letter to my fellow 49 governors today, encouraging them to follow our lead, and show the big drug companies they can’t get away with harming the American consumer,” Blagojevich said. 
“When the big drug companies hear that we’re doing this, they’ll complain.  They’ll make threats.  They’ll try to scare people.  That’s what they always do.  But one of the most interesting things about the debate over importing prescription drugs from Canada is this: the people see right through the FDA’s false claims.  They see right through the big drug companies’ scare tactics.  The American people know they’re paying way too much for prescription drugs, and they’ve had enough.  You can’t stop an idea whose time has come.  And that’s exactly why we’ll fight and fight, and ultimately succeed, in helping people save money on the cost prescription drugs.”

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