Insider's Rx For Drug Costs

Drug Executive Criticizes The High Cost Of Drugs In America

Instead of Americans taking buses across the border to Canada to buy affordable drugs, Rost thinks the drugs should come to them. That's what happens in Europe, where a tightly regulated system of importing drugs from country to country has been in place for more than 20 years.

Here's how it works in Europe. Pharmaceutical companies sell the exact same drug to different countries at different prices. For example, most drugs cost less in Spain than they do in Denmark. So an entire industry has developed that buys up drugs in countries where they're cheaper, and sells them in countries where they're more expensive, at a discount, of course. The practice is called parallel trading.

Paranova is a parallel trading company just outside Copenhagen, owned and run by Eric Pfeiffer. Paranova is stacked with drugs coming from and going to different European countries.

Pfeiffer showed 60 Minutes how parallel trading works to get cheaper drugs into the marketplace. An asthma inhaler is expensive in Denmark and cheaper in Spain. Pfeiffer's company bought a lot of it from Spain, and is now repackaging it to be sold in Danish pharmacies, at a discount. They don't make drugs; they're just the middlemen.

"Effectively, what we do is take it out, put the label on and then it's put back in the boxes again with a leaflet in Danish language," says Pfeiffer.

"We sort of walk a little bit into the world of the absurd when you figure out that what you're doing is spending money to make something cheaper," says Simon.

"Yes," says Pfeiffer.

The original asthma inhaler is never opened. In fact, no one at Paranova ever touches any of the drugs, only the outside packaging, and the factory is inspected regularly by the Danish health authorities.

Pfeiffer says this same arrangement could happen between Canada and the United States: "Or between Europe and the United States. And by doing it from Europe, it would even be cheaper than from Canada."

To help ensure safety in Europe, you can't buy parallel traded drugs over the Internet, only from a licensed pharmacy. Danish pharmacist Uta Porksen showed 60 Minutes how it works for the consumer.

She displayed an asthma inhaler that's called Spirocort in Denmark. It happens to be the exact same drug as a product called Pulmicort, which was imported by Paranova. The big difference? The Spirocort costs about $40 dollars more.

"If I come in and I've got a prescription for Spirocort, you're gonna give me the Spirocort, right, the more expensive one?" asks Simon.

"The law in Denmark is made the way that I have to ask the patient if he wants the cheaper one. And we always ask the patient," says Porksen.

"Ok, you're asking me if I want the one that's $40 dollars less?" asks Simon.

"Yes," says Porksen.

"And I'll ask you, 'Is it the same thing? And you'll says, 'Yes.' And I'll say, 'Give me the cheaper one.'"

"Yes, and you will get the cheaper one," says Porksen.

But is parallel trading safe? It depends whom you ask.

"I would be happy to let FDA in here to see how we do it and they would have no problem whatsoever," says Pfeiffer.

"So, if the big question for Americans, as it is, is, 'Is it safe to ship drugs from country to country as long as it's properly regulated?'" says Simon.

"Yes," says Pfeiffer. "For sure."

But in America, the drug companies say they aren't so sure that importing drugs from country to country really is safe.