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Our Take: HHS, FDA finalize rule allowing states to import prescription drugs from Canada

Oct 05, 2020

The Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) released a 179-page final rule on Sept. 25 that, if implemented, will allow states and other specified entities to establish Section 804 Importation Programs (SIPs) to import prescription drugs from Canada.

Under the final rule, states, Indian tribes, and (eventually, in some circumstances) pharmacists and wholesalers could submit SIP proposals for FDA review and approval. Authorized SIPs would facilitate the importation of certain prescription drugs approved in Canada that also meet the FDA’s safety regulations.

The drugs would have to be relabeled with U.S. labeling and undergo testing to make sure they meet established standards, the FDA stated in a press release. In addition, the SIPs would have to show “significant cost reductions” for U.S. consumers, although the final rule does not specify the amount of savings required.

Insulin is excluded from the SIPs, but HHS and the FDA also issued final guidance that drug companies can use to reimport products manufactured and intended for sale in other countries, including certain FDA-approved biological products and combination products.

Before the federal agencies finalized the rule, six states had already passed legislation centered on establishing a drug importation plan. These states are well-positioned to be among the first to receive FDA authorization if the rule is implemented.

A Health Affairs blog post provided a detailed explanation of several obstacles that could stand in the way of implementation, including potential opposition from drug manufacturers, Canadian officials and distributors, and other stakeholders. In fact, a day after the final rule was released, the American Pharmacists Association expressed its concerns in a statement, and Reuters reported that Canadian Prime Minister Justin Trudeau said he would take U.S. importation plans “into account” but would “ensure an adequate and safe supply for Canadians first and foremost.”

There could also be numerous legal challenges surrounding the stipulated reduction in drug costs. According to the Health Affairs blog post, the federal government could have avoided several of these legal obstacles if it had designed “an importation program of its own, rather than delegating the responsibility to the states.”

Our Take: This step by HHS and the FDA is one of several attempts the Trump administration has made to lower prescription drug prices. Of course, importing drugs from Canada (or elsewhere) isn’t a new idea. The concept has been kicked around for years.

Concerns about patient safety are almost always cited as the primary objection to legalizing the importation of prescription drugs, but of course there are other reasons such legislation hasn’t gained traction.

For one, the requirements for implementing an importation program under Section 8 of the Federal Food, Drug, and Cosmetic Act call for the HHS Secretary to certify to Congress that any importation program will pose no additional risk to the public’s health and safety, and that the program will result in the significant cost reductions previously mentioned. It’s no easy feat to meet both requirements, as HHS Secretary Alex Azar has no doubt discovered.

For another, Big Pharma is fond of making profits. Just this past week, the House Oversight Committee conducted hearings in which the CEOs of several major drug companies testified about their firms’ drug pricing strategies. The hearings are part of an investigation that the late Rep. Elijah Cummings, D-Md., initiated last year.

The investigation revealed excessively repetitive price increases for a number of commonly prescribed drugs, oftentimes just to meet imminent sales and revenue targets. The committee released an especially damning report on Wednesday detailing its findings on Teva’s pricing practices for the multiple sclerosis (MS) drug Copaxone. The committee’s report on Celgene’s pricing practices for Revlimid, a drug used to treat multiple myeloma and other cancers, was equally incriminating.

Other committee reports on price increases by Novartis (for cancer drug Gleevec), Mallinckrodt (for H.P. Acthar Gel, which is used to treat acute exacerbations of MS), and Amgen (for the TNF inhibitor Enbrel and for Sensipar, a treatment for hyperparathyroidism associated with chronic kidney disease) provided further evidence that some drug companies routinely employ substantial price hikes to meet their revenue goals.

In any event, it will be late November before the HHS/FDA final rule takes effect — and that’s if the courts don’t block it first. Then, it’ll take time for states to design their SIPs, get FDA authorization, and, finally, implement their importation programs. Some states won’t go through all the hassle, at least not right away, which means consumers could end up paying significantly higher or lower prices for their medications, depending on which state they live in.

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