IPA BC - Questions & Answers

What is the IPA BC?

What exactly is an "Internet" Pharmacy?

How did the International Pharmacy industry get its start?

How big is the International Pharmacy industry?

Is the International Pharmacy business legal?

Isn't it illegal for a Canadian pharmacy to fill a prescription for an international patient, without that patient having been seen by a Canadian doctor?

But didn't one B.C. doctor get fined for doing that recently?

How does a patient get his or her prescription filled?

Isn't that called "countersigning" or "cosigning"?

What is the IPA position on independent medical reviews?

So it's legal in Canada. Is it legal in the United States?

Which U.S. states are currently importing drugs from Canada?

There are U.S. bills that could legalize importation, right?

How safe are the drugs imported by U.S. citizens?

So it's safe. Why hasn't the FDA come on board?

Any other reasons for the FDA stand?

But what about fraud and abuse? Shouldn't the FDA be concerned?

Why are the pharmaceutical companies aligned against you?

Why are drug prices so high in the U.S.?

How does their system differ from Canada's?

But if Big Pharma isn't as profitable, won't this cut into Research and Development?

Nevertheless, they do help bring new drugs to the market. Right?

What about our drug supply? Aren't the International Pharmacies putting the Canadian drug supply in jeopardy?

Might Big Pharma retaliate by raising Canadian drug prices to be more in line with American prices?

What if Big Pharma decided to say, 'Forget Canada' - we'll pull our drug'?

Could there be any shortages in the future?

Speaking of shortages: what's this about a pharmacist shortage?

What is the root cause of the shortage?

Isn't the problem even more acute in rural Canada?

What benefits do International Pharmacies bring to British Columbia specifically, and Canada generally?



What is the IPA BC?

We are the International Pharmacy Association of British Columbia (IPA BC), a coalition of distance-based heath care providers located in the province of BC. Our mandate is to promote the growth of BC-based International Pharmacies, to inform the public about what we do, and to dispel some of the myths about our industry.

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What exactly is an "Internet" Pharmacy?

First off, we're not "internet" pharmacies, although the internet is one way a client can get in touch with us - a first step, only, to having their prescription filled. We are fully functional pharmacies that utilize all the checks and balances of a normal dispensary. We have permanent addresses, and employ real, not "virtual," people - pharmacists, pharmacy technicians, managers and support staff. The only difference is that the clients we serve require their drugs to be shipped to them. Primarily, the patients we supply live beyond our borders. And so a more accurate term would be "International Pharmacies" - which is what we call ourselves.

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How did the International Pharmacy industry get its start?

The origins of the International Pharmacy trade can be traced back to the year 2000 and to two Manitoba pharmacists, each of whom pioneered the marketing of heath care products over the internet independently of each other. Andrew Strempler, then just 25 and a newly graduated pharmacist, realized there was a price discrepancy between the cost of NicoretteŽ gum in the United States and Canada. In a novel entrepreneurial stroke, he decided to auction his supply of NicoretteŽ on eBay. Within three months, Strempler went from selling one box of Nicorette a week to 150 boxes a day, making him the largest NicoretteŽ retailer in Canada. At about the same time Daren Jorgenson, a pharmacist from Winnipeg, began selling glucose monitoring equipment through an internet website. Both men soon realized, however, that what the American market really needed was patented medicines at a reasonable price. Today Strempler's RxNorth and Jorgenson's CanadaMeds.com are major players in this new and expanding industry.

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How big is the International Pharmacy industry?

The latest information indicates annual national sales of about US $1 billion, with approximately 2 million American patients serviced. As for industry growth in British Columbia, IMS Health, a Montreal-based consulting firm that compiles health data, estimates that in 2002-2003, BC-based IPs did $108 million in sales, an increase of 321% over the previous year and putting BC only second to Manitoba in revenue. Since then, the industry has grown substantially. IPA BC estimates that sales have grown to over $260 million in the past twelve months.

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Is the International Pharmacy business legal?

Yes. Exporting Canadian-approved drugs to other countries is entirely legal, and contravenes neither the letter nor intent of any Canadian law, as this Health Canada information posting from May, 2004, confirms:


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Isn't it illegal for a Canadian pharmacy to fill a prescription for an international patient, without that patient having been seen by a Canadian doctor?

No. The federal Food and Drug Act simply stipulates that, in order to fill a prescription, a pharmacist must have a prescription issued by a physician licensed to practice in Canada.

But didn't one B.C. doctor get fined for doing that recently?

Yes - but he was fined not by any court or government agency, but by the professional organization to which he belongs. In July, 2004, Dr. Satnam Singh Gandham, a Richmond, BC physician, was disciplined and fined $25,000 by the College of Physicians and Surgeons of British Columbia for writing prescriptions without conducting a face-to-face consult for clients who reside in the United States. He was not in violation of any law; rather, Dr. Gandham was held to be in breach of the College's guidelines. To say that these guidelines have been selectively applied in this case would be an understatement. To date, Dr. Gandham is the only physician in British Columbia who has been penalized by the College, although many others are engaged in the same behavior. Indeed, as discussed above, the practice of Canadian doctors providing prescriptions to patients they have never physically examined occurs routinely in the traditional practice of medicine throughout Canada. The solution to the "co-signing" issue is to remove that requirement from the relevant federal regulations.

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How does a patient get his or her prescription filled?

Very much like he or she would in a conventional pharmacy - but with even more safeguards. Although each pharmacy has its own way of processing a prescription order, the main practices are standard across our industry. First, a patient must contact the international pharmacy, which can be done in a variety of ways: telephone, fax, mail or internet are the most common. Then, new patients fill out a patient profile (medical history) detailing current health status, any allergies they may have, and listing medications they're currently using. The patient then faxes or mails in his or her prescription, which has already been issued by a licensed American physician who has conducted a face-to-face examination of the patient.

Upon receipt of the U.S. prescription, the International Pharmacist reviews the prescription, checking for, among other things, dosage irregularities and possible drug interactions. If required, the pharmacist then phones the patient to verify the accuracy of the records, and to offer answers to any questions the patient might have concerning the medication. If the International Pharmacist has concerns about the prescription, he or she will telephone the patient's American doctor. If all is fine, the International Pharmacist then faxes the patient's medical history and U.S. prescription to a licensed Canadian physician, who then conducts an independent medical review of the case file before issuing a prescription that can be filled in Canada.

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Isn't that called "countersigning" or "cosigning"?

It is, in fact, an "independent medical review." It is a real prescription, issued by a licensed Canadian physician who has reviewed a patient's medical history, allergies, and drug history.

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What is the IPA position on independent medical reviews?

First off, it's the law - a requirement of all Canadian pharmacists by the Food and Drug Regulations (Section C.01.041) -and so we're bound by, and determined to, follow it. Nevertheless, for reasons discussed above in this paper, we believe that this technical legal requirement is unnecessary and excessive. It is common knowledge that U.S. doctors provide some of the finest medical care in the world to their patients, just as Canadian doctors do. Accordingly, we believe that the Federal law should be amended in recognition of this to permit Canadian pharmacies to honour a duly licensed American doctor's prescription. With 29 U.S. States honouring prescriptions written by Canadian doctors in their pharmacies, it is only fair to provide this reciprocity.

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So it's legal in Canada. Is it legal in the United States?

While some in the popular media have assumed that it is illegal to import drugs from outside of their country, this assumption has little support in U.S. law. U.S. law puts the onus on the U.S. Food and Drug Administration (FDA) to prove that a drug is not accepted by experts as "safe and effective" for its intended use before importation would be unlawful. Oddly, the FDA does not allow re-importation of drugs manufactured in the United States, on "safety" grounds. Many leading drugs, including those sold in the United States, are manufactured elsewhere, such as Canada, Ireland or continental Europe. In practice, the FDA very rarely invokes the "re-importation" rule against U.S.-made drugs, and has a policy of allowing into the U.S. up to a 90-day supply for personal use.

There is also enormous grassroots pressure for the FDA not to enforce the limited restrictions on drug re-importation. Many of the individuals who are currently getting their medicines from Canadian International Pharmacies are senior citizens on fixed incomes. The optics, as they say, of trying to stop them from re-importing U.S.-made drugs would be terrible. It is also evident to most of the stakeholders, with the possible exception of the major drug companies (also known as Big Pharma), that the price of patented medicines in the United States is a critical problem.

Another reason we feel the FDA hasn't been aggressive about medications being re-imported from Canada is that the FDA knows that drugs from Canadian pharmacies are, simply put, totally safe.

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Which U.S. states are currently importing drugs from Canada?

First, that's a bit misleading. No states are importing drugs from Canada: None. But after conducting due diligence - which included inspection visits to Canadian International Pharmacies, including some based in British Columbia - five states have set up websites which point a minority of their citizens who are without prescription drug coverage or the means to acquire their medications in the United States toward approved Canadian pharmacies. Those states are Minnesota, Wisconsin, North Dakota, New Hampshire, and Washington. Many cities, including San Francisco and Boston, are also helping facilitate the purchase of medicine from Canadian-based International Pharmacies. Vermont is currently suing the FDA to allow the uninsured and the poor among its citizens to legally import drugs from Canada.

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There are U.S. bills that could legalize importation, right?

Yes. Specifically, there is Bill S. 2328, which would legalize importation of prescription drugs from other countries, starting with Canada. This is a bipartisan effort spearheaded by Senators Byron Dorgan (Democrat, North Dakota) and Olympia Snowe (Republican, Maine) and currently supported by 22 cosponsors, including John McCain and Edward Kennedy. Unlike another bill proposed by New Hampshire Republican Judd Gregg, the Dorgan-Snowe bill sets out penalties for pharmaceutical companies who attempt to cut off the drug supply lines to out-of-country International Pharmacies, thereby effectively blocking imports to the U.S. The bill has wide support, and is endorsed by, among others, the American Association of Retired Persons (AARP), the largest and most influential senior's organization in the U.S.

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How safe are drugs imported by U.S. citizens?

Although the practices of some non-Canadian International Pharmacies are suspect, when it comes to Canadian International Pharmacies, drugs exported to the United States are very safe - a point made not only by our industry, but by a landmark report (GAO-04-820) issued by the federal Government Accountability Office (GAO), a U.S. government body which was tasked by Congress to report on the safety of International Pharmacies.

In the report, the GAO was asked to determine:


- from GAO-04-820

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The GAO purchased 13 different types of drugs (68 samples total) from online sites located in Argentina, Costa Rica, Fiji, India, Mexico, Pakistan, Philippines, Spain, Thailand, Turkey, the United States, and Canada. Their conclusion? Of all the pharmacies studied, Canadian International Pharmacies had the most stringent controls and standards - stricter than any other nation, including IPs based in the United States. Unlike the practices of other countries, no narcotics were shipped by Canadian IPs. And aside from some miniscule variations in composition (often resulting from tablet versus capsule formulations), the drugs that were supplied by Canadian companies were chemically equivalent to those supplied by U.S. drug manufacturers themselves. And unlike IPs based in other countries (including the U.S.), every single one of the 18 Canadian IPs in the GAO study required a prescription issued by the patient's American primary care physician.

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So it's safe. Why hasn't the FDA come on board?

When dealing with the loosening of any regulation, bureaucracies are geared to err on the side of caution. And as the aforementioned GAO report made clear, drug importation from IPs located in countries that don't have the kind of safeguards that we in Canada have developed could be problematic. But a lot of it is also territorial; the FDA, in effect, is loath to cede any bit of their authority to any outside body. (Like, for example, Health Canada, which is responsible for ensuring the safety of any drug exported by a Canadian pharmacy.)

Recently, the intransigence of the FDA has come under fire. Most notably, perhaps, from Dr. Marcia Angell, former executive editor of the New England Journal of Medicine, and author of the recently released The Truth About Drug Companies. As for claims that drugs provided by Canadian International Pharmacies are unsafe, Angel is straight to the point. "That's a lot of hooey. There is no reason that buying drugs in Canada is any less safe than buying them in the United States," Angell told the newsmagazine show 60 Minutes in August, 2004.

As for FDA claim that foreign made drugs could be unsafe, the majority of drugs that are currently marketed in the U.S. are, in fact, manufactured in plants located around the world - and not in the U.S. "The people who say you have to worry about the safety of drugs from Canada are imagining the way it was in the old days. That there's a moat around the United States, that drugs that are sold in the United States are made by only American companies," says Dr. Angell. "It's not that way any more."

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Any other reasons for the FDA stand?

According to some, there's a different agenda at work, as this excerpt from a TIME magazine cover article (February 2, 2004) posts:

"... a TIME investigation suggests the FDA's actions against Canadian imports have been part of a concerted campaign to simultaneously discredit its counterpart agency in Canada, provoke fear among American consumers who buy their drugs there, blunt an exploding political movement among local and state governments to begin wholesale drug buys in Canada and ultimately preserve the inflated prices charged U.S. consumers and taxpayers."

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But what about fraud and abuse? Shouldn't the FDA be concerned?

Unlike some international pharmacies, Canadian IPs do not provide narcotics and controlled substances. The overwhelming majority of drugs that are shipped to the United States are so-called "maintenance medications" designed to treat chronic conditions like, for example, high cholesterol and heart disease. In other words, we supply drugs designed to keep an existing condition under control. Since these drugs are not candidates for fraud and abuse, this potential is simply not part of the equation - for IPs located in Canada.

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Why are the pharmaceutical companies aligned against you?

To protect a status quo that has served (and continues to serve) them exceedingly well. The pharmaceutical industry is ranked as the most profitable industry in America, with an average 17% return on revenue. And some individual companies are doing even better. In 2001, Pfizer earned a 28.4% return on revenues, followed closely by Eli Lily & Co., which earned 24.4%. Contrast this with Intel (11.6%) and GE (10.7%). Is it any wonder Big Pharma would like to leave things as they are?

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Why are drug prices so high in the U.S.?

There are many reasons. Unlike in Canada, the U.S. allows direct-to-consumer (DTC) advertising of prescription drugs - mainly television and print ads for anything from ViagraŽ to PaxilŽ - which, since it was initiated in 1997, has added about US $3 billion to the marketing expenses of American drug manufacturers. Big Pharma also spends extraordinary amounts of time and money lobbying Congress to ensure no laws are passed which might restrict their business practices: according to Common Cause, a multi-interest consumer advocacy group, at last count there were over 600 lobbyists employed by the drug industry, which spent a half a billion dollars to press their case in Washington over a seven year span. These costs are, of course, passed on to the American consumer.

But primarily, the reason drug prices in the U.S. are so high is that America is the only Western country that allows a completely laissez faire approach to drug pricing. In other words, there are no price controls on pharmaceuticals. In this regard, among all other Western countries, the United States stands alone.

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How does their system differ from Canada's?

In Canada, the system operates much differently. In 1987 the Canadian government created the Patented Medicine Prices Review Board, the mandate of which is to ensure that the price of patented drugs in Canada is not excessive. In exchange for increased patent protection, the pharmaceutical manufacturers agreed that (among other things) drugs which are new to the market would not be priced significantly above the cost of its closest related treatment, and that any increases would be tied to the Consumer Price Index. As a result, Canadian patented drug prices have risen by only moderate amounts compared to prices in the U.S. - the country which currently accounts for about half the worldwide revenue of drug makers.

The U.S. has no similar price constraints. As a result, compared to every other Western nation, costs have spiraled dramatically.

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But if Big Pharma isn't as profitable, won't this cut into Research and Development?

That's what the pharmaceutical manufacturers would like you to believe. The fact is that, in the United States, the development of new pharmaceuticals is largely funded by the National Institutes of Health, a federal government organization. But it is the biotechnology firms that usually lead the way in R&D; Big Pharma often only comes into the picture during Phase II or Phase III trials, purchasing the rights for drugs that look promising after much of the real research and development (and the associated risk) has already taken place.

And even when they do come into the picture, the amount of money the drug manufacturers spend on R&D is dwarfed by other expenditures. For example, out of every $100 Big Pharma spends, approximately $30-$35 goes to marketing costs. By comparison, only about $20 is allocated to R&D. And with profit margins at all-time highs, the costs are, once again, passed on to the consumer. The major pharmaceutical companies like to present themselves as almost selflessly charitable, even altruistic. The truth is they are big, robust and very profitable corporations.

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Nevertheless, they do help bring new drugs to the market. Right?

The drug companies are certainly part of the process. But with regard to R&D, many of the drugs Big Pharma "develop" are not, in fact, new at all. A common industry practice is "Evergreening." Often, when a patent is about to run its course and is a candidate for generic manufacture, instead of continuing to market the drug with an expensive high-profile campaign, the manufacturer dramatically reduces the marketing support for their own product. Subsequently the demand trails off. As the demand for the old drug fades, a new drug - with a full-length patent - is positioned to take its place. And often the "new" drug is only a minor variation on the old; a molecule is "tweaked" (slightly altering the molecular structure), thereby rendering it technically "new." Sometimes, the main difference is that the dosage is upped. The drug is then declared more efficacious - not surprisingly, since the patient is now taking more of it.

Evergreening has two purposes. One, to undercut the generic drug suppliers, who now have the right to reproduce a drug - but one whose luster has been intentionally faded, and is no longer the darling of the physician-prescriber. And two, to ensure that the manufacturer continues to dominate a market for which they have developed marketing expertise. While that may be good business, it's not necessarily good medicine.

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What about our drug supply? Aren't the International Pharmacies putting the Canadian drug supply in jeopardy?

In a word, no. But don't take our word for it. Take the word of Health Canada, the federal agency in charge of ensuring the integrity of the Canadian drug supply. Since these baseless claims of IP-related drug shortages were first leveled, Health Canada has investigated every one that has been reported to them. At no time have they ever - ever - found anything to substantiate that the practices of the Canadian International Pharmacy industry has caused even a short-term disruption in Canada's drug supply.

Drug shortages do occur from time to time in Canada. This is due to a number of factors, none of which are related to the exporting of drugs by Canadian International Pharmacies. Those who claim otherwise never present evidence for their claims; by and large they are either fear-mongering, or grossly misinformed. And thankfully, they are at odds with the evaluation of Health Canada's own experts, who have been monitoring the business closely.

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Might Big Pharma retaliate by raising Canadian drug prices to be more in line with American prices?

No. Again, because of the Patented Medicine Prices Review Board (PMPRB) process, any price increases that would be acceptable under the agreement would be tied to the rate of inflation. Any suggestion that there are exceptions to this rule are baseless. This fact was affirmed by Dr. Robert Elgie, the Chairperson of the PMPRB, in his recent speech on the future of pharmaceutical price controls in Canada.

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What if Big Pharma decided to say, 'Forget Canada' - we'll pull our drug'?

In a nutshell, that would constitute a 'scorched earth' approach that no rational pharmaceutical manufacturer would entertain. The public relations nightmare that would ensue would be more than enough to render this approach absurd. (Plus, it would be financially suicidal for public companies whose eyes have historically been fixed on the bottom line.) Also, it would mean their patent protection guaranteed by their participation in the PMPRB price controls would be null and void. In such an extreme case - and it hardly bears thinking about - the Canadian government would likely give the go ahead to generic drug companies to duplicate the formula, thereby ensuring that Canadians would continue to get the drugs they need. (Our own generic drug manufacturing companies are more than capable of stepping in and picking up the slack.) But this scenario is as far-fetched as any science fiction film.

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Could there be any shortages in the future?

As with the above scenario, this is equally unlikely. The drug manufacturers have an enormous capacity to produce vast additional amounts of nearly every medication on the market today. (After all, they're in the business of making and selling as many pills as possible.) Accordingly, the only shortage that is even remotely imaginable is one that would be deliberately engineered by the drug makers. As in the above scenario, the repercussions would be severe and would clearly not be in the drug manufacturer's financial self-interest. But again, if such a policy was pursued by any of the major brand name drug makers, Health Canada would likely immediately intervene and grant compulsory licenses to Canadian-based generic drug companies, thereby ensuring Canadians would continue to receive access to all available prescription drugs.

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Speaking of shortages: what's this about a pharmacist shortage?

There is one. In fact a recent survey of pharmacy owners cited a lack of pharmacists as one of their primary concerns. Wages have also been going up steadily, as the demand for qualified pharmacists outstrips the supply.

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What is the root cause of the shortage?

The reasons are diverse, and complex. It is, in fact, an international problem and has little to do with the advent of International Pharmacies - unlike what some stakeholders have erroneously claimed.

Canada's population is aging, and now requires more drugs, along with more pharmacists to dispense them. There has also been a recent explosion in new drug store openings; many of these new stores are now open 24 hours a day, thus extending the demand for pharmacists to fill an expanded 168 hour work week. (Contrast this with the vast majority of Canadian IPs, which operate on a standard 40 hour work week. Even in Manitoba, the province where the industry is far and away the most developed, less than 10 percent of all Manitoba pharmacists are employed by International Pharmacies. In British Columbia, it is likely that only around one percent of licensed pharmacists are currently employed by International Pharmacies.) Too few students are graduating from university pharmacy programs; this is also a problem.

But the main reason for the pharmacist shortage can be attributed to the increased demand for pharmacists by grocery stores (Safeway, IGA, etc.) and the mass merchandisers like Zellers and Costco. Since entering the drug store market just over a decade ago, by 2002 grocery store pharmacies had grown to represent 811 of the 7296 drug stores in Canada, according to a CIBC market analysis report. In the same report, the mass merchandisers accounted for 453 pharmacies nationwide. Together, this represents over 1200 drug stores, or more than 17% of the nation's totals - a huge number, considering that ten years ago they weren't even part of the picture.

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Isn't the problem even more acute in rural Canada?

Yes. Many of the hardest-to-fill pharmacist vacancies are found in rural communities. This is indeed distressing, but it also reflects an irreversible trend among Canadians generally, one which is certainly not confined to the pharmacy profession. In greater and greater numbers, as a population, we are opting to move from rural communities to urban centers. Rural Canada, then, becomes increasingly under-served by a variety of professionals, including pharmacists.

But here, the expertise gained by International Pharmacies could well prove beneficial. We are world leaders in distance-based health care delivery. It is a model that we feel could also address the needs of rural Canada as effectively as it currently serves our patients across the United States. Distance-based health care delivery is, we feel, the future of health care. For rural Canada, it could be vital.

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What benefits do International Pharmacies bring to British Columbia specifically, and Canada generally?

We are at the vanguard of an over $1 billion business that has grown exponentially in the five short years since it was founded. In the province of British Columbia, we generate revenues of over $260 million a year; by the end of 2005, revenues are expected to eclipse a half billion dollars, making the International Pharmacy industry one of the fastest-growing industries in the province.

More importantly, we directly employ over 700 British Columbian pharmacists, pharmacy technicians, administrative and other support staff. Our presence here in B.C. helps support another 3000 ancillary jobs: shipping companies, web developers, packaging merchandisers, computer programmers, pharmaceutical wholesalers, generic drug manufacturers, and other industries. Indeed, our industry represents a major source of revenue for Canada Post. Across Canada, we create jobs for thousands.

We are experts in distance-based health care delivery. Our expertise will allow us to service parts of Canada that are currently under-served by pharmacists, a problem that will continue to worsen as more of us leave rural Canada for our country's urban centres. But the standards and practices gleaned from our experience as International Pharmacy companies will enable us to fill this domestic void.

We generate a huge tax base. We employ thousands of Canadians. And we do all of this safely, without causing any disruption in the Canadian drug supply - a fact repeatedly underscored by Health Canada and every nonpartisan study that has examined the issue.

We are distance-based health care professionals. We are knowledgeable, ethical and experienced. We are, we believe, the future.

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