Congress

HHS outlines drug import plans as Canada ratchets up concern

Canadians are worried that drugmakers could try to raise prices on the drugs sold there

Health and Human Services Secretary Alex Azar, who was previously skeptical of importation, now says it is more feasible than ever before. (File photo by Bill Clark/CQ Roll Call)

The Trump administration on Wednesday announced plans to help states and others import lower-cost drugs from Canada, a popular but controversial idea that President Trump has embraced but that the Canadian government has pushed back on.

The plans outlined Wednesday will offer guidelines for setting up drug importation programs, but they also highlighted the challenges of this approach to lowering drug prices for consumers in the United States.

[Drug price transparency prompts fight among Democrats]

It is already legal to import drugs from Canada if the Health and Human Services Department says it is cost-effective and safe — which it has declined to do dating back to the Clinton administration. But HHS Secretary Alex Azar, who was previously skeptical of importation, now says it is more feasible than ever before.

“The landscape and the opportunities for safe linkage between drug supply chains has changed,” Azar said in a call with reporters Wednesday. “That is part of why, for the first time in HHS’s history, we are open to importation.”

Azar and Acting Food and Drug Administration commissioner Ned Sharpless outlined two ways that drug imports could occur.

One way would be for states, drug wholesalers or pharmacists to submit plans for demonstration projects to import drugs approved by Canadian regulators that also comply with FDA manufacturing standards. The projects would also have to significantly reduce the cost of the drug to American consumers, according to HHS. The administration will start a rulemaking process to outline requirements for launching those projects.

That pathway could have a major limitation. It would exclude a class of pricey drugs known as biologics, which are derived from living cells rather than traditional chemical compounds and tend to be more expensive than typical drugs. Well-known biologics that wouldn’t be eligible for importation under this pathway include the diabetes treatment insulin and the autoimmune condition treatment Humira — both widely used products whose prices have garnered intense scrutiny.

But under a second pathway, products like that could be imported, and it would apply to drugs sold in places other than Canada. The drugmaker would have to do so voluntarily, though. Manufacturers who wish to bring lower-cost versions of the same products already on sale in the U.S. could repackage the drugs and sell them as technically different products.

“In recent years, multiple manufacturers have stated (either publicly or in statements to the Administration) that they wanted to offer lower cost versions but could not readily do so because they were locked into contracts with other parties in the supply chain,” the HHS fact sheet said.

The drug industry responded to the plan by calling it dangerous for American patients.

"There is no way to guarantee the safety of drugs that come into the country from outside the United States’ gold-standard supply chain," said Pharmaceutical Research and Manufacturers of American President and CEO Stephen J. Ubl. "Drugs coming through Canada could have originated from anywhere in the world and may not have undergone stringent review by the FDA."

[Finance advances drug price measure with tepid GOP support]

State plans

The first four states with laws meant to spur importation programs — Vermont, Colorado, Florida and Maine — are working together to develop plans needed to win a required sign-off from the Trump administration. If they succeed, their plans could spur other states to follow suit.

All of the state plans are still in their early stages and details are far from final.

In Vermont, where the law has been in place the longest, the Agency of Human Services originally planned to submit a plan to HHS by this July. But the state legislature recently delayed that until July 2020, to give it time to work with other states, whose laws only went into effect in recent months.

A report by Vermont’s human services agency says that private insurers in the state could save $1 million to $5 million per year. But the state would likely have to do a lot of work to guarantee the drugs pose no risks to health and safety, and it is unclear whether the benefits to insurers would outweigh the state’s expense.

“These activities likely come at substantial cost to the state, requiring upfront investment and appropriations,” the report said.  

Import plans also face questions about safety. Those concerns are not based on drugs that Canadians themselves are taking, which by all accounts are as safe and effective as drugs in the U.S. Opponents of importation instead fear that wholesale importation would result in a proliferation of sketchy online pharmacies purporting to sell safe Canadian drugs but are actually selling products of unknown provenance.

In March, before leaving the FDA, former commissioner Scott Gottlieb cast doubt on broader importation plans. “Any kind of wholesale importation really isn’t feasible, given all that we’ve seen in counterfeits coming into this country,” he said during an event. He suggested that any importation would have to be done on a case-by-case basis with the FDA working directly with a drug’s manufacturer.

Canada's concerns

Critics of importation from inside and outside the U.S. are making their case more forcefully as the state efforts heat up.

“We are watching this closely. Our government would oppose any initiatives that could adversely affect the supply of prescription drugs in Canada or the costs for Canadians,” Mathieu Filion, director of communications for the Canadian health minister, told CQ Roll Call.

Canadians are worried that drugmakers could try to raise prices on the drugs sold there, and the government could decide to bar exports if it was worried about statewide importation schemes gaining traction. 

Canada’s system “isn’t designed to supply medications to a population size that is considerably bigger than ours,” said Joelle Walker, the vice president of public affairs for the Canadian Pharmacists Association.

Ahead of a visit to Canada last weekend by presidential candidate Sen. Bernie Sanders, I-Vt., with American patients purchasing insulin, her group and 14 others wrote to the Canadian health ministry expressing those concerns and asking the ministry to intervene if necessary to protect the Canadian drug supply.

“We’re allotted a certain amount of their product at a Canadian level and so that could actually be a significant drain on the Canadian supply,” Walker told CQ Roll Call. “We’re very worried that it will increase the frequency and severity of drug shortages for really important and critical medications.”

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