Pfizer has said it is restricting its sales of medicines to Canada to prevent pharmacies there from selling the drugs back into the US market at cheaper prices.
Elderly Americans can buy cheaper drugs in Canada
Pfizer, the maker of Viagra and anti-cholesterol drug Lipitor, has written to Canadian pharmacists saying it will no longer supply wholesalers there.
Instead, Pfizer has told pharmacists they must buy direct from the company and it will not supply re-exporters.
US drug firms are angry that Canadian wholesalers and online pharmacies are re-exporting medicines back to the US to meet huge demand from elderly US citizens who prefer to pay cheaper Canadian prices.
Canadian internet pharmacies can sell medicines at as little as 30% of the US price because Canada has price controls on drugs.
UK firm GlaxoSmithKline has already put a similar ban in place.
Anglo-Swedish drug maker AstraZenca said in April it would investigate any large orders from Canada. US firms Merck and Wyeth have also taken action.
Elderly people's ability to afford drugs has become a major sparring point between the US Congress and President George W Bush in the build-up to the 2004 presidential election.
Healthcare is an emotive issue
Forty million Americans lack private health insurance.
Elderly people depend on the state's Medicare programme to cover their treatment costs, but it does not pay for drugs.
President Bush and Congress are locked in a complex battle over how to improve access to affordable medicines, which includes proposals for a drug discount system.
The need for American old folk to buy their drugs in Canada is an emotive strand in this debate. Coach parties of pensioners often cross the border on drug buying sorties.
Pfizer said it wanted to "better enforce our terms of sale, which are that our products are only sold in Canada for Canadian patients and that they are not for export".
But US consumer lobby group Public Citizen said Pfizer was being "greedy" to protect its profits.