The Canadian International Pharmacy Association says Canadian Internet pharmacies are being driven to "the brink of collapse" by sales restrictions imposed by major US drug manufacturers.

AstraZeneca is the latest company to take protective measures that effectively block wholesalers from selling its products to online pharmacies. Eli Lilly and Pfizer implemented similar measures earlier this year. Eli Lilly told Internet pharmacies to reveal the volume of drugs they order from wholesalers or have their supplies cut off.

Although it is illegal for Americans to import drugs, an estimated one million - often underinsured - Americans buy their drugs from Canada, where they are often half the price. The cross-border price war has led to an online pharmacy boom in Canada, in particular in Manitoba, where 80 of Canada's 220 online pharmacies are now located. The big drug companies are complaining that they are losing money.

Research by the Pharmacy Alliance for Canadians found that Internet pharmacy companies are diverting more than 40 per cent of Manitoba's drug supply to the US. Most of Manitoba's pharmacies are struggling to hire enough pharmacists to care for their patients. Critics call it "a betrayal of Manitoba's health care birthright".

The Canadian drug trade has also become a magnet for fraud. Last month, major players in Canada's online pharmacies met in Winnipeg to discuss the problem of scam websites that are threatening their $4bn business. The companies pretend to be Canadian, but are often located in Europe, Asia and the US, and sell counterfeit or contaminated products.

The sales restrictions seem to have had immediate effect. Customers are being told to switch to other brands or generic drugs, or to pharmacies in other countries. ®