HALIFAX – A Canadian think-tank report on the cross-border prescription drug trade prompted a U.S. lobby group to issue a new warning on importing medicine from foreign countries, particularly Canada.

The Halifax-based Atlantic Institute for Market Studies (AIMS) released a new paper yesterday saying that several states in the U.S. are trying to control Medicare costs by promoting the re-importation of prescription drugs from Canada, which are made in the United States.

But AIMS contends the policy not only disrupts the Canadian market, but would abet a “fraud perpetuated on American consumers by American politicians.”

Brian Ferguson, an economics professor at the University of Guelph and author of Should prescriptions travel borders? for AIMS, warns the importation of seemingly inexpensive drugs from Canada could become an issue in the upcoming American election.

Several U.S. states are already actively promoting the re-importation of prescription drugs from Canada as a method to control Medicare costs. California has recently written the White House, asking the federal government to allow re-importation, while Nevada introduced a bill in 2006 that would allow Canadian pharmacies to become licensed to sell to the state.

Mr. Ferguson argues the policy is a bad idea, and could not only cause market shortages of in-demand drugs in Canada, but that such large-scale purchases wouldn’t make economic sense.

“A policy of controlling U.S. drug costs by shipping drugs north to Canada and hoping that they will still be cheap when they come back into the United States is on a par with asking the tooth fairy to provide a national dental service on the grounds that it will be self-financing,” Mr. Ferguson wrote.

The AIMS paper provoked the Pharmaceutical Research and Manufacturers of America (PhRMA) into sending out a statement cautioning that medicines from other countries aren’t safe.

“If certain importation schemes pass through Congress, counterfeit medicines could cross into our borders… and put patients lives at risk,” said Ken Johnson, PhRMA’s senior vice-president, in a statement issued yesterday afternoon.

Mr. Johnson noted that importation supporters suggest the purchase of foreign medicines, including from Canadian Internet pharmacies, is safe. But Mr. Johnson said, “The facts prove otherwise.”

He cited the death last December of 58-year-old Marcia Ann Bergeron of Quadra Island, B.C., who died from ingesting fake drugs she bought on the Internet.

Ian Munro, director of research for AIMS, said the problem partly stems from the fact that American politicians see Canadian drugs selling for cheaper prices in Canada then assume they can re-import the medicine and help bring down overall American costs for drugs.

If U.S. states did begin to import larger quantities of medicine, it could lead to shortages, Mr. Munro said.