White House unveils plans to reimport medicines from Canada

HHS secretary Alex Azar

The Trump administration unveiled plans yesterday to allow the reimportation of some drugs from Canada into the US, in order to help patients source cheaper medicines.

The plans are an escalation in the president’s on-off assault on drug prices, which he and his Republican party, and the opposition Democrat party, are focusing on as a major electoral issue ahead of the November 2020 election.

The idea of reimportation from across the border in Canada, where prices are a fraction of the US, has been around for decades. The idea has always been staunchly opposed by previous Presidents, health secretaries and FDA commissioners, ostensibly on safety grounds, but the White House has broken with this orthodoxy in order to tackle high drug prices.

Health and Human Services secretary Alex Azar  (and former Eli Lilly executive) said the federal government is “open for business” on such a strategy, despite having dismissed the idea as a ‘gimmick’ just a year ago.

The plan would allow the import of of certain categories of lower cost drugs from Canada, but would exclude all biologic drugs (including insulin), intravenous drugs and controlled substances.

These limitations would severely restrict the impact of the plans, as these exemptions would include many of the most high cost drugs, such as rheumatoid arthritis drug Humira and cancer treatment Keytruda, to name but two.

This system would rely on individual states developing their own proposals for safe importation and submitting them for federal approval - and Colorado, Florida and Vermont - already have legislation in place to support importation, and are working on plans.

A second pathway would allow manufacturers to import versions of any FDA-approved drugs from foreign countries - including insulin - and sell them at a lower cost than the same US versions. This would allow pharma companies to bypass contracts with pharmacy benefit managers (PBMs), but is unlikely to have any takers from pharma, which has been quick to express its strong opposition to the plans.

PhRMA's Stephen Ubl

“The administration’s importation scheme is far too 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 America (PhRMA) president and CEO Stephen J. Ubl in a statement.

He said that Canadian officials have also warned that the policy is unworkable, and could cause shortages north of the border because of diverted supplies.

“In the words of Secretary Azar just last year, drug importation is a ‘gimmick’ and ‘the last thing we need is open borders for unsafe drugs.’ Rather than surrender the safety of Americans by importing failed polices from single-payer countries, we should work on solutions here at home that would lower patient out-of-pocket costs at the pharmacy counter.”

PhRMA had been in support of proposals to ban the current system of rebate payments from pharma to PBMs, but this plan was recently abandoned when the White House was informed it would result in billions of increased costs to the federal government.

Instead, Trump last month unveiled plans to introduce international reference pricing – another radical policy which was once unthinkable for a US administration, and also strongly opposed by pharma.

The President is also backing a new plan from Senate finance committee leaders Charles Grassley and Ron Wyden to cap out-of-pocket medicine costs for patients starting in 2022.

Responding to the reimportation plan, Frederick Isasi of health consumer group Families USA said his organisation strongly supported the plan, but said it would be “watching carefully” to see if the administration follow through with the promise.

“However, this is a tactic, not a policy solution. It is a work-around that will not solve the underlying prescription drug cost problem in the United States – massive market failure stemming from unregulated monopolistic pricing by drug companies that incentivises legal tricks instead of innovation to save lives.”

A crowded field of prospective Democrat presidential candidates are already campaigning for 2020, including senators Bernie Sanders and Elizabeth Warren. They are all setting out their own plans for health reforms and drug price controls, which include proposals to allow direct negotiations on price with pharma, and international reference pricing.