The Trump administration on Wednesday took steps toward allowing states to import lower-cost drugs from Canada, starting a lengthy rulemaking process for a policy that would depend on cooperation from America’s wary northern neighbor.
Several states have approached the Department of Health and Human Services about drug importation plans and President Donald Trump has been eager to approve them. He’s publicly prodded HHS Secretary Alex Azar to approve them, particularly a proposal from Florida’s Republican Gov. Ron DeSantis, a Trump ally.
Yet the law allowing prescription drug importation requires the administration to go through a rulemaking process, which typically takes months. A public comment period on the proposal issued Wednesday would end in March, and Azar said the administration will move as quickly as it possibly can to consider the comments. But the administration will also have to take time to carefully finalize the rules so they can stand up to legal challenges, which could be likely given the pharmaceutical industry’s opposition.
Importation would happen one of two ways: states, wholesalers or pharmacists would import drugs from Canadian sellers, or drugmakers themselves would be able to import the identical foreign versions of their U.S. products.
The first importation pathway would depend on Canada’s cooperation. The country has already signaled that it wouldn’t allow the wholesale exports of drugs, since its supply is meant to accommodate Canada’s patients, and not the much larger United States population.
Furthermore, the importation pathway available to states wouldn’t include products like insulin or other complex and expensive biotech drugs.
Azar acknowledged that limitation but argued that if the importation program were successful, Congress might consider changing the law to allow the importation of the biologic drugs, which require more careful handling in transport, such as cold storage, because they are produced from living organisms or parts of them.
“I would envision that as we demonstrate the safety as well as the cost savings from this pathway that that could be basically a pilot and a proof of concept that Congress could look to and potentially take up for more complex molecules,” Azar told reporters on Tuesday.
Florida, Colorado, Maine and Vermont have begun formally considering how to set up drug importation systems, and other states have expressed an interest in enacting laws to set up programs.
To formally kick off the process, the Food and Drug Administration issued a proposed rule Wednesday outlining how states could develop importation schemes and how they could win administration approval after proving that they are safe and would save money.
Approved importers would need to be U.S.-licensed wholesalers or pharmacists who would have to identify foreign sellers that are licensed by Canada’s health ministry as wholesalers. Both would be subject to supply chain security requirements outlined in the proposed rule, and would have to provide the FDA with information about the cost savings achieved by their programs and any adverse events caused by the imported medications.
At the same time, the agency issued draft guidance for how drugmakers could take steps to import the identical foreign versions of brand-name products sold in the United States.
This second pathway for importation would effectively require drugmakers to compete with themselves on certain products, but the Trump administration says there are instances where the complex nature of health insurance contracts might make that a viable proposition for some drugmakers.
As administration officials argue, manufacturers are locked into contracts with insurers and pharmacy benefit managers that they will sell products for a certain price, and then issue rebates based on sales volume. However, because those rebates can sometimes be so large, it might benefit drugmakers to introduce the foreign version of their product — as long as it is identical to the version sold in the U.S. — so that it can be sold outside the contract. Then the new product wouldn’t be subject to the rebates, and could be offered at a lower price to patients. That would require the identical product to have a drug identification code distinct from the original, and the Trump administration says it will grant the new code in these instances.
Previous administrations have found that it would be too onerous to verify the safety of an importation system, and the pharmaceutical industry also argues it would put patient safety at risk.
Azar said that the nature of the global drug supply chain has changed over time to make importation more feasible. He said the proposed system would be “done in a way that prioritizes safety and includes elements to help ensure that importation does not put patients or the U.S. drug supply chain at risk.”
But he noted that patients shouldn’t confuse the potential importation systems — which would involve picking up imported medicines from U.S. pharmacies — with ordering drugs from online pharmacies purporting to be in Canada.
“When one goes online and buys drugs that are supposedly from Canada, or supposedly from a Canadian drug store, you are taking your life into your own hands,” he said.