Don't Ignore the Steady Drumbeat of Drug Importation
One way that policymakers and industry insiders have constantly considered to lower drug prices has been through importation.
We are living during a time in which we are witnessing the possibilities of curative medications and their significant improvement on patient outcomes. However, these breakthroughs have come at the price of higher-cost medications, leading to a vigorous debate about the value of improved outcomes in terms of time and spending.
One way that policymakers and industry insiders have constantly considered to lower drug prices has been through importation. This would theoretically lower drug prices by allowing market players from outside the United States to compete. Although this idea is intriguing, there undoubtedly are obstacles, such as safety concerns and federal law. However, this has not stopped the recent activity we have seen in Congress and on the state level.
Let’s consider the latest policy ideas on the subject of importation.
First, let’s examine the current law for importation, as this subject depends on whether a medication is manufactured as an unapproved drug versus an unapproved drug imported via a consumer. The FDA’s enforcement on unapproved medications intended for commercial use is evident within its guidance. The United States Federal Food, Drug, and Cosmetic Act prohibits interstate shipment of unapproved new drugs, including importation. The act allows the FDA to refuse admission of any drug that “appears” to be unapproved, which forces the importer to prove the desired drug has been approved by the FDA or be subject to FDA enforcement actions.1
However, the FDA’s viewpoint on personal importation of unapproved drugs is different, with several factors considered by agency personnel when determining whether to enforce the act or take action against the importer.
The FDA will allow importation of a drug when its intended use is unapproved for a serious condition that does not have an effective treatment available domestically through commercial or clinical means, there is no known commercialization or promotion to US residents by distributors of the drug, the drug is not considered to pose an unreasonable risk, and the individual seeking to import the drug affirms in writing that it is for personal use—typically in quantities under a 3-month supply—and provides the name and address of the US-licensed doctor responsible for treatment or proof that the drug is for the continuation of a therapy that began in a foreign region.
Thus, although the FDA does have preferences on commercial versus personal importation of unapproved prescription drugs, the law is flexible on allowing for certain situations.
Recently, the FDA weighed in on the idea of importation. FDA Commissioner Scott Gottlieb, MD, who has been very aggressive in implementing new policies in an attempt to lower costs across the supply chain, last year announced a new working group that would examine importation. Gottlieb’s approach is to consider importation through the lens of alleviating drug shortages from single-source manufacturers.
“We want to examine whether, under these narrow conditions, the additional market competition from the short-term importation of foreign versions of the drug may complement the FDA’s current efforts and help meet near-term patient need in the [United States] until new competition is able to enter the domestic market,” Gottlieb wrote in a statement on the FDA website in July 2018. “To pursue these considerations, we’re forming a work group to explore various policy frameworks that, through the exercise of enforcement discretion or otherwise, would involve the importation of drugs under circumstances that meet these criteria and that would be suitable substitutes for the FDA-approved version of the medically necessary drugs. We will consider whether and how the foreign versions of these medicines can be imported with adequate assurances of safety and effectiveness.”2
Gottlieb added that a policy involving importing drugs would be a temporary measure until adequate competition enters these categories and any resulting policy would need to be structured to eliminate the risk of counterfeit or unsafe drugs entering the US supply chain.
Congress already has a few initiatives on importation:
- The Affordable and Safe Prescription Drug Importation Act would instruct the HHS secretary to issue regulations allowing wholesalers, licensed US pharmacies, and individuals to import qualifying prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers. After 2 years, the secretary would have the authority to permit importation from countries in the Organisation for Economic Co-operation and Development that meet specified statutory or regulatory standards that are comparable to US standards. The bill would not permit importation of controlled substances, anesthetic drugs inhaled during surgery, or compounded drugs.
- The Safe and Affordable Drugs from Canada Act would permit the importation of prescription drugs from approved pharmacies in Canada.
- If enacted, HR 447 would allow for the importation of affordable and safe drugs by wholesale distributors, pharmacies, and individuals.
State laws in 2019 have already started to build more momentum for importation:
- Under the Colorado Wholesale Importation of Prescription Drugs Act, the state Health Care Policy and Financing departments will design a program to import prescription pharmaceutical products from Canada for sale to Colorado consumers. The program design must ensure both safety and cost savings and be sent to HHS for the secretary’s approval to import Canadian pharmaceutical products.
- Connecticut has multiple legislations on importation. Specifically, SB 84 establishes a prescription drug importation program that permits the state’s Department of Social Services to import prescription drugs with federal approval at a significant cost savings from licensed manufacturers or distributors in Canada. It also protects any existing discounts provided by pharmaceutical manufacturers to providers qualified for such discounts under Section 340B of the Public Health Service Act, ensures that any prescription drugs imported from Canada meet quality and safety standards set by the FDA, imports only prescription drugs that are costliest for the state medical assistance program and to consumers not eligible for that program, sets a price per prescription drug purchase by such consumers necessary to finance the program, is in compliance with applicable requirements, and prohibits the distribution, dispensing, or sale of imported drugs outside of Connecticut’s borders.
- In Indiana, HB 1228 requires the state’s Department of Health to conduct a study and report to the legislative council concerning a state prescription drug importation program through which the state would import certain prescription drugs, including insulin, from Canada for Indiana consumers.
- In Minnesota, SF 495 would establish a wholesale Canadian drug importation program.
- In Missouri, SB 127 proposes the state Department of Health and Senior Services study the processes through which the state could import certain prescription drugs from other countries for Missouri consumers.
- In Oklahoma, SB 940 would create a wholesale Canadian drug importation pilot program. The state’s Health Care Authority would be responsible for identifying 5 to 10 highly prescribed drugs through the state’s Medicaid program, which would then be imported from Canada.
- Oregon has multiple legislations on this issue, including HB 2680, which authorizes the administrator of the Oregon Prescription Drug Program to cooperate with Canadian provinces or territories in bulk purchase of prescription drugs.
- Lastly, in West Virginia, HB 2319 seeks to create a state-administered wholesaler drug importation program.
It does seem as though the law passed in Vermont to enact the first prescription drug importation legislation in the nation has spurred other states to pursue similar programs. Vermont’s act directs the state’s Agency of Human Services to consult with interested stakeholders and appropriate federal officials to design a program for wholesale importation of prescription drugs from Canada in compliance with federal requirements.
The new law is interesting in how it threads the needle with the limits of importation in federal law. The report to the Vermont legislature from the state’s Agency of Human Services outlines an interesting aspect of federal importation law that has not been addressed:
Under Federal Food Drug and Cosmetic Act (FDCA) Section 804, Congress permits importation and reimportation of prescription drugs from Canada by a pharmacist or wholesaler, provided the drugs meet certain minimum standards and the Secretary of Health and Human Services (HHS) certifies to Congress that implementation of such a program will (A) pose no additional risk to the public’s health and safety; and (B) result in a significant reduction in the cost of covered products to the American consumer. This is not a waiver of existing law; rather, the Secretary may certify a program of importation if both safety and savings are assured. By law, prescription drugs may only be imported from Canada, laboratory testing is required, and there are prohibitions on the importation of a controlled substance, biological product, infused drug, intravenously injected drug, or a drug inhaled during surgery. If the Secretary so certifies, the law directs HHS to promulgate regulations as necessary to implement the program. Section 804 has never been used; approval for this kind of program has not yet been requested by any state.3
Although this is an interesting concept, the report describes numerous issues that have to be considered in order for the program to be compliant with federal law, such as licensure, track-and-trace requirements, sufficient oversight to ensure drug authenticity, and ensuring adequate inspection. In conclusion, could importation be a reality in the United States? It’s possible, but there are a number of questions that I and many others have that must be considered.
First, the element of safety must be addressed. In my opinion, the FDA is the best agency in the world overseeing any medications. Assuring the public that the same safety and quality standards exist in this scenario could be challenging. Counterfeiting remains a threat.
Second, our drug supply chain has been adapting to the new requirements set forth by the Drug Supply Chain Security Act, which seeks to achieve electronic unit—level traceability of prescription drug products by 2023. Importation would have to incorporate many critical components of the legislation, such as the standardized application of unique product identifiers by manufacturers, wholesale licensure requirements, and data exchange requirements and ensuring that all business be conducted between authorized trading partners.
Third, how will our pharmacies be reimbursed? We are witnessing the negative impact on community pharmacies caused by pharmacy benefit managers’ (PBMs) use of spread pricing and other aggressive formulary management protocols. If a state such as Vermont instituted importation, it would be hard to imagine that PBMs would not be used, so that state would not have to reinvent the reimbursement method. Discussions with pharmacies would certainly have to take place and cover these questions:
- Is there a way to guarantee that potential savings from importation will be passed onto the consumer?
- Will a foreign government ensure that drugs coming into the United States are safe and effective?
These ideas are not being created in a vacuum. If you have the same concerns as I do, you need to pay attention to this issue. Even though importation seems like it has been an idea discussed for years that has never gotten much traction, I do cau- tion not to sleep on the steady momentum this issue has been receiving lately.
- Blumberg MA. Importations of drugs. FDA website. www.fda.gov/ForIndustry/ImportProgram/ucm173751.htm. Published April 3, 1998. Updated September 25, 2015.
- Statement by FDA Commissioner Scott Gottlieb, M.D., on the formation of a new work group to develop focused drug importation policy options to address access challenges related to certain sole-source medicines with limited patient availability, but no blocking patents or exclusivities [news release]. Silver Spring, MD: FDA; July 19, 2018. https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm613931.htm.
- Backus E. Report to the Vermont Legislature: Wholesale Importation Program for Prescription Drugs Legislative Report. National Academy for State Health Policy website. nashp.org/wp-content/uploads/2019/01/Report-to-VT-Legislature-on-Rx-Wholesale-Importation-1_3_2019.pdf. Published December 31, 2018.