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August 2, 2019

Trump unveils plan to import foreign drugs. Will it actually lower prices?

Daily Briefing

    HHS and FDA on Wednesday unveiled two potential pathways that entities in the United States could use to safely import drugs from other countries, where they are typically sold at lower prices.

    Infographic: 5 ways to control the flow of drug expenditures

    Drug importation has long been touted by Democrats as a way to increase access to lower cost drugs, but the measure has drawn criticism from Republicans and drugmakers. President Trump earlier this year broke with his party and signaled his support for drug importation.

    Federal law grants HHS the authority to allow drug imports as long as the HHS secretary certifies the imported drugs are safe and effective and would save U.S. residents money.

    Some states—including Colorado, Florida, Maine, and Vermont—have adopted their own plans to import drugs from Canada, where they often are sold at lower prices, and several other states are considering such proposals. Those states all needed HHS' approval to move forward with the plans—and Wednesday's announcement creates a pathway for future approvals.

    The pathways

    Under one pathway, HHS and FDA would use existing rulemaking authority to allow states, drugmakers, and pharmacists to develop pilot programs to import drugs from Canada "that are versions of FDA-approved drugs that are manufactured consistent with the FDA approval." The proposals would be subject to HHS approval and would have to meet conditions HHS would outline in the rulemaking.

    The second pathway would require FDA to develop safety guidelines for drug manufacturers that want to import FDA-approved drugs they sell in foreign countries to the U.S. market. According to HHS, drugmakers that wish to import drugs to the United States would have to verify the foreign version is the same version as the United States and ensure the drug is appropriately labeled for sale in the United States.

    Drugmakers would be able to sell the drugs using a new National Drug Code that HHS said could allow them to price the drugs lower than what is required under their current distribution contracts. The FDA pathway would not include high-priced drugs such as biologics, but HHS in the guidance said it could include drugs such as insulin, as well as those used to treat cardiovascular disorders, cancer, and rheumatoid arthritis.

    What does this mean?

    It's unclear how impactful a drug importation program would be at lowering prescription drug spending, but a 2004 Congressional Budget Office analysis suggested that any "reduction in drug spending from importation would be small," given the United States' unique drug market.

    In addition, Canadian health care groups have noted that Canada has a smaller supply of drugs than the United States and that diverting some of its supply to the United States could cause drug shortages. For instance, a coalition of health, hospital, and pharmacy groups in a letter to Canadian Minister of Health Ginette Petitpas-Taylor wrote, "The Canadian medicine supply is not sufficient to support both Canadian and U.S. consumers."

    In addition, some experts have noted that the second pathway would be voluntary for drugmakers, and they questioned whether drugmakers would want to voluntarily sell their drugs at lower prices in the United States.

    Pharmaceutical Research and Manufacturers of America President and CEO Stephen Ubl denounced the proposal in a statement, saying it would jeopardize safety. "Drugs coming through Canada could have originated from anywhere in the world and may not have undergone stringent review by the FDA," he wrote.

    Next steps

    According to NPR, Wednesday's announcement marks the first step in what could be a years-long process to implement a drug importation plan in the United States. Several experts have noted that the plan is likely to be challenged in court (Chappell, NPR, 7/31; Abutaleb, Washington Post, 7/31; Thomas, New York Times, 7/31; Owens, "Vitals," Axios, 8/1; HHS news release, 7/31).

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