May 18, 2018

Vermont just approved wholesale drug imports from Canada (but one obstacle remains)

Daily Briefing

    Vermont Gov. Phil Scott (R) on Wednesday signed into law legislation that makes his state the first to allow U.S. wholesalers to import drugs from Canada, a move that proponents say could help control rising drug prices.

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    President Trump during the presidential campaign backed the idea of importing drugs from Canada, but HHS Secretary Alex Azar, whose department must sign off on Vermont's importation plan, has been critical of the move and Trump did not mention the idea in his recent speech on drug prices. Azar on Wednesday called drug importation proposals a "gimmick."

    Law details

    The Vermont law was modeled on legislation from the National Academy for State Health Policy (NASHP). The law creates a wholesale drug importation program that would allow U.S. wholesalers to purchase drugs from a wholesaler in Canada. According to NASHP, prescription drugs cost 30% less in Canada.

    According to The Hill, several other states allow individuals to import drugs from other countries, but Vermont would be the first to allow wholesalers to do so. At least eight other states have similar legislation pending.

    Before Vermont's law can take effect, the state must submit a certification request to HHS. But, according to KHN, Azar's opposition could present a hurdle.  

    According to Politico, Vermont also must come up with a way to fund the program.


    The Pharmaceutical Research and Manufacturers of America (PhRMA) has opposed proposals to import drugs from Canada and other foreign countries, saying it presents a safety risk because such drugs would essentially "bypass the FDA-approval process." Caitlin Carroll, a PhRMA spokesperson, called Vermont's new law "highly irresponsible." She said, "Patient safety must be our top priority, and our public policies should reinforce—not undermine—that commitment," Carroll said.

    Trish Riley, NASHP's executive director, said the wholesaler requirement set Vermont's proposal apart from others. "Our model legislation assures safety and savings by buying drugs through the existing supply chain, so that all the checks and balances are in place to assure safety," she said. However, according to Kaiser Health News, some experts say Vermont's proposal does not appear to offer clear net gains for Canadian wholesalers.

    Michael Law, a pharmaceutical policy expert and associate professor at the University of British Columbia's Center for Health Services and Policy Research, said, "Almost inevitably, Canadians would cease getting better prices." He added, "If I were a (Canadian) company, I wouldn't want that to occur— and (drugmakers) could take steps to limit the supply coming north. … It probably results in (Canadians) getting higher prices" (Roubein/Seipel, The Hill, 5/16; Pradhan, Politico, 5/16; AP/Sacramento Bee, 6/16; Krothapalli, Reuters, 5/16; Luthra, Kaiser Health News, 5/18).

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