December 4, 2019

Vermont last week became the second state to submit to HHS a proposal to import prescription drugs from Canada, as President Trump in recent weeks has reiterated his intention to allow states to do so.

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Background

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 lower costs to U.S. consumers.

HHS and FDA in early August unveiled two pathways that entities in the United States could use to safely import drugs from other countries.

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.

HHS has not yet finalized those pathways, but Trump last month said he was working with Florida Gov. Ron DeSantis (R) and other governors on a plan to allow states to import lower-cost drugs. "I'm going to be giving governors the right very shortly to buy ... their prescription drugs from other countries," Trump said.

Florida in August submitted a concept paper to HHS outlining the state's proposal for importing drugs from Canada, making it the first state to submit such a plan to the Trump administration. According to Modern Healthcare, policymakers in Colorado, Connecticut, Maine, Michigan, and New Hampshire also are working on or considering proposals to import prescription drugs from other countries.

Vermont submits concept paper outlining proposal to import drugs

Vermont last week submitted to HHS its own concept paper detailing its proposal for importing prescription drugs from Canada, which differs from Florida's proposal "in a few key ways," Modern Healthcare reports.

Under Florida's proposal, state officials would use FDA's existing framework for regulating drug repackaging and relabeling facilities to ensure imported drugs are effective and safe. Florida proposed hiring a vendor to administer the program.

Florida's proposal applies only to consumers enrolled in "certain state/government [health care] programs." The proposal excludes several classes of inhaled and injected drugs and controlled substances or biologic products, such as insulin.

In contrast, Vermont's proposal would apply to all consumers enrolled in commercial health plans. Under Vermont's proposal, the state would require insurers to pass on any cost savings they achieve by importing prescription drugs to consumers via lower premiums, deductibles, and copayments for prescription drugs.

Vermont's proposal also excludes controlled substances, biologic products such as insulin, infused drugs, injected drugs, parenteral drugs that FDA says pose a threat to public health, and drugs inhaled during surgery.

According to the Associated Press, Vermont officials plan to submit a formal application by July 1.

Vermont Gov. Phil Scott (R) said, "While Vermont is small and our ability to impact pharmaceutical drug prices may be limited, I think it's important to do what we can and do it in a public way because our small size cuts both ways. It also allows us to be nimble and, coupled with our close proximity to Canada, allows us to be a leader on this policy" (Cohrs, Modern Healthcare, 11/26; Cutler, WCAX, 11/26; AP/St. Catharines Standard, 11/26; Vermont Concept Paper, October 2019).

What executives need to know about pharmacy

While historically pharmacy may have been viewed as a cost center, today pharmacy services generate a significant portion of system revenues and are essential to the achievement of strategic system-level priorities.

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