Judge Says No To Cheaper Drugs

A federal judge granted the government's request Thursday to shut down a company, operating as Rx Depot and Rx of Canada, which helps customers buy cheaper prescription drugs from Canada.

The decision by U.S. District Judge Claire Eagan is a blow to customers who use the company to purchase less expensive medicines. It also could affect cities and states nationwide that are considering allowing employees to import drugs in order to cut rising prescription costs.

An estimated 1 million to 2 million Americans buy Canadian drugs through the Internet, storefront operations or by crossing the border.

Rx Depot had been operating 85 storefronts in 26 states, using a computer network to connect Americans in need of prescription drugs with Canadian pharmacies that fill the orders cheaper, reports CBS News Correspondent Jim Axelrod.

The government asked Eagan to shut down the 85 storefronts operating nationwide under the two names.

"This court is not unsympathetic to the predicament faced by individuals who cannot afford their prescription drugs at U.S. prices," the judge wrote. "However, the defendants are able to offer lower prices only because they facilitate illegal activity determined by Congress to harm the public interest."

Some of the company's storefronts have already been shut by local authorities in states including Oklahoma and Montana.

FDA officials alleged that the Tulsa-based company is breaking the law and putting the public at risk by importing drugs outside of its scrutiny. Only manufacturers are allowed to bring their medicines into the country.

Judge Eagan said Congress is the best forum for weighing the prescription drug importation issue.

Department of Justice spokesman Charles Miller said officials were reviewing the order and had no immediate comment.

Drugs are up to 50 percent cheaper in Canada than the United States because of government price controls.

Rx Depot's attorney had argued that shutting down the firm would create a domino effect that would cut off Americans nationwide from the only medications they can afford.

Several Rx Depot customers told Eagan that they could not afford their medications otherwise. A heart transplant patient testified in a hearing last month that he saves nearly $9,000 a year through the company.

Springfield, Mass., Mayor Michael Albano has said his city expects to save $9 million through a voluntary program in which employees get their drugs through Canada. Illinois, Michigan, Iowa, Wisconsin and Minnesota all recently announced they are considering similar programs.

But on Thursday, the Food and Drug Administration informed CanaRx Services Inc., the business supplying prescription drugs to the city of Springfield, that its operations are illegal. The FDA's statement was in response to a letter from CanaRx in which the company outlined operational changes it made after regulators sent a warning letter last September.

Rx Depot faxes customers' prescriptions and medical histories from its shopfronts to a Canadian pharmacy. The pharmacy fills the prescription and mails the medication directly to the customers.

Justice Department lawyers argued that Rx Depot is "able to offer such low prices only because they facilitate illegal activity determined by Congress to harm the public interest."