Sandoz, the generic manufacturing affiliate of Novartis, is under investigation by the Serious Fraud Office (SFO) for alleged criminal marketing practices. The SFO is investigating activities at Sandoz to ascertain if it broke criminal and competition law while selling its products between January 1996 and December 2000.

Sandoz manufactures an extensive range of generic drugs in the UK, including tamoxifen and ibuprofen. However, both Novartis and the SFO were unable to comment on which drugs are being investigated.

During the four-year period in question, Sandoz traded as Lagap Pharmaceuticals and was not part of the Novartis portfolio but as an affiliate of the Swiss-based pharma company today, if Sandoz is found guilty it could be costly for Novartis. The inquiry into the generic affiliate's activities is part of a widening investigation by the SFO into price-fixing by pharma companies.

In April 2002, the SFO launched a major investigation into a suspected conspiracy to defraud the NHS through price-fixing on prescribed penicillin-based antibiotics and warfarin between January 1996 and December 2000.

The SFO is now planning to interview leading figures, a spokesman for the SFO confirmed that other, so far unnamed, individuals would also be called for interview. News of the investigation came as Novartis chief executive admitted that big pharma had lost the trust of consumers and regulators.

An arthritis drug withdrawn on safety grounds last year probably killed many thousands of patients, a new study suggests. Researchers said the drug Vioxx may have caused between 88,000 and 140,000 serious heart problems in the United States alone since its introduction in 1999.

With heart disease death rates in the US running at 44%, many of these cases were likely to have been fatal, it was claimed. Vioxx, which has the scientific name rofecoxib, was prescribed to 400,000 patients in the UK. It was taken off the market at the end of September after a three year trial linked it to an increased risk of heart disease events.

The study published on-line today by the Lancet medical journal analysed data from 1.4 million Californians who had used various kinds of non-steroidal anti-inflammatory drugs (NSAIDs).

Among them were 27,000 patients who had been taking Vioxx, which belongs to a family of drugs known as Cox-2 inhibitors. A total of 40,000 were given another Cox-2 inhibitor, Celebrex, while others were taking ibuprofen or naproxen. The investigators, led by David Graham from the US Food and Drug Administration's Office of Drug Safety, found that 8,143 had suffered from serious heart disease between 1999 and last September.

Of these, 1,508 died suddenly from a heart problem.

U.S. states that have looked to Canada to help their residents win steep discounts on prescription drug prices are turning to Europe for the same deals because the Canadian government is considering shutting off the southbound flow. Illinois and three other states already have authorized reimportation programs that recognize shipments of prescriptions from such places as the United Kingdom and Ireland.

It’s unclear how successful they and other state legislators might be with that initiative because there have been moves in Europe to restrict access to low-cost drugs across national lines. But lawmakers say it is important to explore every possible avenue toward cheaper prices.

States from Illinois and Wisconsin to New Hampshire and West Virginia have either authorized reimportation of prescription drugs from Canada or explored the idea. Several of them now have added Europe to the mix because Canada’s health minister has said the government was considering significantly limiting sales to individual U.S. consumers.

"The idea was to spread the risk" of drug manufacturers cutting off supply to an individual country that reimported prescriptions to the United States, said Caleb Weaver, project manager of I-SaveRX, the initiative launched by Illinois and now available in Wisconsin, Missouri and Kansas. Vermont would join that program.

The European Court of Justice is considering whether manufacturers can limit supplies to countries with cheap prices. That would crack down on consumers who get their drugs cheaper from neighboring countries via "parallel trade" among European Union nations, according to the U.S. National Legislative Association on Prescription Drug Prices. There have been several such challenges in the past.

Patients blame the pharmaceutical industry for efforts to choke off supplies from countries where prices are low because of strict government regulation. They accuse the industry of using its economic muscle to force such national policy decisions.

"You actually have an industry that’s bullying around countries," said House Health Care Chairman John Tracy, D-Burlington. "It’s bizarre that we’re even in this position."

Wanda Moebius, a spokeswoman for the industry trade group Pharmaceutical Research & Manufacturers of America (PhRMA), disingenuosly spins the line that the lobby group is concerned about the safety of drugs being imported to the United States and those concerns are increased by the possibility of importing from Europe. Really Wanda's worry is profits - European drugs are exactly the same and are regulated just as strenuously.

Wanda claims European imports could threaten safety because they could carry labels in languages that consumers don’t speak. "There’s no guarantee English will be used," Wanda said. "When you start going outside the U.S., you are opening yourself up to a number of safety issues." Wanda seems not to know which language the English speak.

Dr. Peter Rost, a marketing vice president with Pfizer Inc., told Vermont lawmakers Thursday that reimportation from Europe was a logical and viable alternative. Parallel trade, a version of reimportation among European countries, has operated successfully for 20 years, he said.

"Just authorizing a scheme where drugs come from Canada is doomed to fail," said Rost, who emphasized he was not speaking on behalf of his company. "You must look to the European Union." Despite the myriad obstacles, including opposition in Washington, state legislators continue to push for reimportation because consumers can save an average of 50% on the costs of drugs purchased in Canada.

"For very expensive drugs it really can be a lifesaver," said Sharon Treat, executive director of the National Legislative Association. "Unfortunately in this country many people don’t have any kind of prescription drug coverage that approaches those savings, or any (coverage) at all."

Prescription drugs are big business and have become a big political issue. A recent federal report said retail sales of prescription drugs amounted to $179.2 billion in 2003. That represented 11% of all health care spending. Precise estimates are hard to come by but between 1 million and 2 million Americans get their drugs from Canada. The Canadian model developed after U.S. Rep. Bernie Sanders, I-Vt., began staging high-profile bus trips to Canada more than five years ago. He took senior citizens to Montreal and its suburbs, where they got so-called maintenance drugs at significant savings. Maintenance drugs are those that patients must take regularly to care for a chronic disease such as high blood pressure.

What has developed since then is an Internet-based system in which a prescription from an American doctor is co-signed by a Canadian physician, filled and then shipped to the United States. Sanders unsuccessfully sought in the federal Medicare bill to explicitly authorize reimportation from Canada and 18 other countries.

"While we don’t think it would necessarily be bad if it was just Canada, we think it’s important that the state of Vermont as well as the federal government open as many markets as possible so you don’t give the government and pharmaceutical companies so much power to manipulate the situation," said Sanders spokesman Joel Barkin. "We are encouraging Vermont and the federal government to look for any licensed pharmacy outside the U.S. where people can find affordable, safe drugs."

If the Canadian government closes the door to U.S. citizens importing prescription medications from Canada one drugstore plans to keep open for trade. Universaldrugstore.com, one of Canada's largest mail-order pharmacies, is not threatened by recent dire promises by the Canadian Federal Government to possibility eliminate the cross border sale of prescription medications to uninsured and low income Americans. They plan to import drugs from Europe.

"Our current customers and our prospective new customers need not worry," says Jeffrey Uhl, President of Universal Drugstore. "We have been anticipating such a move by our government for some time now, and we were not surprised that action to stop prescription drug importation has progressed so quickly following President George W. Bush's visit with Prime Minister Paul Martin about six weeks ago."

Universal Drugstore has taken steps over the past year in preparation of challenges by the pharmaceutical industry and governments on both sides of the border. While many other Canadian pharmacies have been caught off guard by the speed at which the Canadian government is progressing, Universal Drugstore says that they are ready to flip the switch and move elsewhere.

"We have strengthened our network of international partner pharmacies, developed a steady stream of safe, reliable medicine, and taken steps to ensure quick and easy delivery to our customers," says Mr. Uhl. "Our Director of International Affairs has been working diligently to find the best resources for our customers. He is a pharmacist, as well as a former independent consultant and analytical writer on international pharmaceutical issues. His main focus is wholesale and retail distribution, generics and parallel trade. He oversees procurement, regulations and safety of our European operations." Uhl continues, "Standards of pharmacy in Europe mimic or exceed those in Canada, and we are confident of our continued long term success," he continues. "New pressure from the Canadian government has caused serious concern for our patients whose access to affordable medicine appears to be threatened. We want to assure our customers that we will be here for them. We have an ethical and moral obligation to all of our customers that rely on our services. Their medications will remain available through our service."

Mr. Uhl who is cautiously optimistic about what will happen to other mail order pharmacies and the effect these actions may have on the industry in Canada says, "Many have looked to us to create strategic alliances and European partnership arrangements. Unfortunately, we can't help all the other Canadian pharmacies. Our investments in technology, people and foreign pharmacy inspections have paid tremendous dividends for us and are the keys to our future. We have not been fiddling while Rome is burning."

Mr. Uhl finds the timing and motives behind the recent push for regulatory changes by the Canadian government suspicious. "Why, after four years of allowing this industry to flourish and prosper is it now questionable?" asks Mr. Uhl. "Is this just a ploy to stop Big Pharma's recent decrease in profits? Heaven forbid the most profitable industry in the world would take a miniscule hit to their massive bottom lines so that the uninsured and poor seniors of the U.S. could obtain affordable medications."

Universal Drugstore remains confident that they will stay in business and continue to provide Americans with affordably priced medications even in the face of regulatory pressures by the Canadian Federal government. They will continue to provide high quality medicines, obtained from licensed pharmacies in strictly regulated countries from around the world. "The countries we are looking into are extremely safe and well regulated. Also, they often have prices that are equal to or better than in Canada," states Randall Stephanchew. "Our customers will be delighted with the quality and pricing of medications from our international pharmacy partners." Mr. Stephanchew, Director of Pharmacy and Professional Services for Universal Drugstore, has over 14 years experience as a Health Canada official, specializing in compliance and enforcement, and was instrumental in signing the Mutual Recognition Agreement between Canada and the EU.