Congress, Bush Close to Caving In on Drug Imports

Posted October 22, 2003 at 2:27pm

Disruptive and possibly dangerous though it may be, it seems inevitable that Congress will pass — and that President Bush will sign — legislation to permit mass reimportation of pharmaceuticals from Canada. [IMGCAP(1)]

Members of the House-Senate conference on Medicare prescription drug legislation, increasingly optimistic that they will produce a bill soon, say importation is all but certain to be a part of their final measure.

And indications from health care lobbyists and administration officials are that, despite safety objections from the Food and Drug Administration, Bush will go along.

One administration official told me, “Our position is not that under no circumstances could reimportation work, but we want to make sure that Americans are getting drugs that are affordable and safe.”

The administration seems to have shifted from declaring that mass imports from Canada would create insurmountable safety concerns to calling for more FDA authority and resources to oversee the imports.

The rush toward reimportation seems undeterred by a blockbuster Washington Post series on massive diversion, counterfeiting and illegal trafficking in drugs from storefronts, over the Internet and across U.S. borders that has overwhelmed the FDA’s enforcement capabilities.

The rush is driven by politicians seeking to capitalize on public outrage — mainly from seniors — over the fact that drugs in Canada and Europe commonly sell for a fraction of the cost in the United States.

The FDA permits individuals to import drugs for their own use from abroad, but Congress is on the verge of allowing mass imports by pharmacies and wholesalers. At least two state governors have said they want to import to lower Medicaid costs.

The pharmaceutical industry, despite the millions it spends on lobbying and advertising, has been unable to convince Congress or the public that importing price-controlled drugs from other countries will cost lives by inhibiting drug firms’ ability to do research and develop new medicines.

A Washington Post/ABC News poll published Monday showed that 69 percent of U.S. adults say it should be legal for Americans to buy prescription drugs from Canada, European nations and other industrialized countries.

Those are the terms of a bill sponsored by Reps. Gil Gutknecht (R-Minn.) and Rahm Emanuel (D-Ill.) that passed the House by a 243-186 margin in July, despite vociferous opposition from the FDA, the White House, various disease advocacy groups and Republican leaders.

Medicare conferees and health care lobbyists predict that a final Medicare bill will include authority for mass drug imports only from Canada, along the lines of a bill originally introduced by Rep. Jo Ann Emerson (R-Mo.).

The Senate’s Medicare bill contained a Canada-only provision, along with the stipulation that imports could be halted if the secretary of Health and Human Services declines to certify that the measure could be administered safely.

The certification requirement is seen as a “poison pill” by backers of reimportation because both Bush’s Health and Human Services secretary, Tommy Thompson, and then-President Bill Clinton’s secretary, Donna Shalala, refused certification. It remains to be seen whether it makes it into the final Medicare bill.

Conferees and health care lobbyists say the pace of negotiations on the bill has stepped up to the point where they are optimistic about producing a conference report soon.

They say that House conferees are prevailing on key issues like means-testing of premiums and “premium support” (eventually forcing traditional Medicare to compete with private insurance plans).

Premium support has been seen as a show-stopper by Senate Democrats, but Republicans hope to work out a “mitigating” plan to avoid a Democratic filibuster. They say they can’t pass a bill in the House without some form of premium support.

On several grounds, mass drug reimportation is uncharted territory. According to drug companies, it will cut deeply into their profits and inhibit their ability to do life-saving research.

However, it’s also possible that by various means importation might simply even out the huge price differential between Canada and the United States.

By itself, the huge new demand from the United States could raise Canadian prices. Also, a number of drug companies have indicated that they will withhold drug supplies to Canada above that country’s own needs, possibly inducing Canada to deny shipments to the United States.

In an interview, Shalala said she couldn’t take a position on a Canada-only import proposal — she vetoed a Gutknecht-like plan — but she said “there are price controls all over the world so they cost-shift to Americans. It’s fundamentally unfair.”

“I absolutely prefer negotiated prices for Medicare here to reimportation both because of safety and because I care a lot about this extraordinary period of biomedical research that we’re in,” she said. “I do care about hurting drug company profits and their ability to do research. That’s why I want to negotiate a fair price that takes into account their research costs.”

Shalala said that the government should negotiate through private pharmaceutical benefit managers rather than directly with the manufacturers, which might lead to U.S. price controls.

On safety, she said, “I don’t think it’s a good idea to put the FDA in the position of having to watch every drug that comes into the United States.”

For sure, though, if Congress passes a reimportation bill it will complicate the FDA’s already-onerous task of policing a drug supply that Commissioner Mark McClellan said this week is “under unprecedented attack from a variety of increasingly sophisticated threats.”

While terrorism has led Congress to upgrade the FDA’s capacity to monitor food imports, he said in a speech Monday, “debate in Congress has mainly been about taking away from our existing authorities and simply declaring more non-FDA-approved drugs to be legal.”

At a minimum, if Congress and the president are going to allow billions of pills to be imported from Canada, they need to vastly increase the FDA’s ability to police the supply and ensure that the drugs aren’t fakes originally produced, say, in some Third World garage.