1 (888) 402-3465

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.

What else you need to know

Over 100 medical providers are among the 345 defendants the Department of Justice (DOJ) has charged in connection with fraudulent billing schemes that allegedly have cost public and private payers more than $6 billion. The majority of that sum — more than $4.5 billion — involves false and fraudulent claims for telemedicine services, the DOJ said in a news release last Wednesday. The remainder involves false claims totaling more than $845 million in connection with substance abuse treatment facilities, and more than $806 million in other types of health care fraud and illegal opioid distribution schemes. In addition, 256 other medical professionals had their Medicare billing privileges revoked as a result of their involvement in telemedicine schemes, according to the DOJ. The department said this was the largest health care fraud and opioid takedown in the DOJ’s history; it was a joint effort by the DOJ, the Department of Health and Human Services’ Office of Inspector General, the FBI, U.S. Attorneys’ Offices, and the Drug Enforcement Agency.

Universal Health Services (UHS) had an extensive “IT security incident,” the hospital management company confirmed last Tuesday. The malware attack occurred early on Sept. 27, disrupting all of the company’s IT systems. The local CBS affiliate in Philadelphia said the attack, which locked up UHS’ databases, may have been “one of the largest cybersecurity breaches in U.S. history.” A spokesperson for the King of Prussia, Pa.-based chain said all 250 facilities in the U.S. were affected, according to The Associated Press, but the company’s U.K. facilities were not compromised. Although emergency cases were directed to other locations and UHS employees had to resort to backup protocols, such as paper documentation, UHS said there was no disruption to patient care. As of late last week, UHS said it was making steady progress toward getting its IT systems operational, Healthcare Dive reported. The company said there was no evidence that patient information had been accessed or stolen.

Beaumont Health and Advocate Aurora Health agreed to end their merger discussions, the organizations announced Friday. Talks between the two health systems began last year, but the pandemic put the discussions on hold. After the health systems signed a nonbinding letter of intent in June, physicians and nurses at Beaumont signed a petition opposing the planned merger, and some resigned. State and federal lawmakers also voiced concerns, as did donors. In the statement posted on both health systems’ websites last Friday, Beaumont Health CEO John Fox said, “[A]t this time, we want to focus on our local market priorities and the physicians, nurses and staff who provide compassionate, extraordinary care every day.” In a virtual press conference, Fox blamed the failed merger attempt largely on the pandemic, noting that in-person meetings to build relationships could not be conducted.

UnitedHealth Group acquired DivvyDose, a privately held home-delivery pharmacy, in a bid to compete with Amazon’s PillPack, CNBC reported. UnitedHealth did not comment on the acquisition, but, citing a person familiar with the deal, CNBC said the purchase price was slightly more than $300 million. According to the report, DivvyDose does not charge for deliveries (though patients do pay their insurance plan’s copay), and the online pharmacy accepts all major insurance plans.

The Blue Cross Blue Shield Association has agreed to pay $2.7 billion to settle an antitrust lawsuit, The Wall Street Journal reported. A class-action lawsuit brought on behalf of health plan members in 2012 alleged that Blue Cross Blue Shield companies conspired to split up their markets so they could avoid directly competing with one another, an action that purportedly led to higher prices for members. While the association has approved the settlement, the 36 individual companies that make up the national association still need to sign off on the deal, as does U.S. District Judge David Proctor, who is overseeing the litigation.

Lafayette General Health is officially part of Ochsner Health. The systems announced their intent to combine about a year ago, and New Orleans-based Ochsner said in a news release last Thursday that they had completed the merger. Ochsner will invest $465 million in the Lafayette system’s hospitals and clinics over the next decade, including an immediate $94 million investment at Lafayette General Medical Center, according to the press statement. The seven hospitals in the Lafayette system will rebrand to incorporate the Ochsner name.

share

Contact Darwin Research Group and we will get right back to you.