Quick Summary:
- Requires HHS to provide waivers to individuals to import drugs;
- Allows reimportation of insulin;
- Requires HHS to finalize the proposed importation rule.
Deeper Dive:
The Executive Order on Increasing Drug Importation to Lower Prices for American Patients (EO 13938) requires the Secretary of HHS to provide waivers to individuals to import drugs so long as it does not pose additional risk to safety and results in lower costs. The Order also allows “re-importation” of insulin should the Secretary find it is required for emergency medical care. Finally, it requires HHS to finalize the proposed rule from December 2019 to allow importation of certain drugs from Canada.
The December 2019 proposed rule on importation creates a means through which states or other non-federal government entities can create their own programs to import certain medications from Canada, subject to FDA review and approval. The proposed rule excludes from the importation program the following: controlled substances, biological products, infused drugs, intravenously injected drugs, drugs that are inhaled during surgery, and drugs subject to REMS.
The December 2019 proposed rule does not create a means through which individuals can import medications, nor does it address insulin reimportation. Current federal laws already prohibit reimportation of insulin, unless the Secretary of HHS determines the drug is needed for emergency medical care. And while personal importation of medications is also prohibited, Congress has directed HHS to allow it if it is clearly for personal use and the imported drug or device does not present an unreasonable risk to the individual.
Insights:
The potential impact of this Order will vary by state and drug. Under the December 2019 proposed rule, manufacturers would still be responsible for implementing track and trace programs for their medications and would need to provide information to the importer regarding the drug’s movements prior to its importation into the U.S. The regulatory impact analysis that the FDA included in the proposed importation rule indicated that there could be some financial impact on drug makers related to data reporting, but the agency said it did not have enough information to estimate costs.
Demand for certain medications in the Canadian market could increase to help offset the supply sent to the U.S. In addition, some domestic demand could decrease as state agencies that directly purchase medications shift to obtaining medications from state importation program suppliers.
While it is not clear how many states would implement an importation program, nor what their programs would look like, five states have passed legislation related to drug importation (Colorado, Florida, Maine, New Mexico, and Vermont), which provide examples of how an importation program could be structured. Specifically, in the President’s remarks regarding this Executive Order, he referenced Florida’s proposed drug importation program as an example of what the Order allows.
Under Florida’s proposed importation program (implementing House Bill 19/Senate Bill 1528) the state will hire a vendor to contract with Canadian suppliers to import drugs to qualified state wholesalers and pharmacists. Florida’s concept paper describing the importation program provides an initial list of medications that would qualify for the program. That list includes multiple HIV medications, as well as some medications treating relapsing multiple sclerosis and allergic rhinitis. Imported medications will be batch tested by the importer at an FDA-qualified lab to ensure they meet FDA’s identity, strength, purity, and quality standards. The imported drugs will be repackaged and relabeled to meet U.S. requirements. Imported medications would be available to the state’s Department of Health, Agency for Health Care Administration, Department of Corrections, Agency for Persons with Disabilities, and Department of Children and Families.
However, all of this is contingent upon exportation from Canada. The Canadian government and the Canadian Pharmacists Association are opposed to this idea. In formal comments submitted to HHS regarding the proposed rule, the Canadian Pharmacists Association cited vehement concerns about exacerbation of drug shortages in Canada and noted that opposition from drug manufacturers, wholesalers and the Canadian government will make implementation unworkable. Even more telling, the formal comments from the Government of Canada says the country “will employ all necessary measures to safeguard its drug supply and preserve access for Canadians to needed drugs.” So, while importation from Canada may be allowed by U.S. rules, it is likely to be blocked or prohibited by Canada.
Timing:
It is not clear when the Administration will finalize the proposed December 2019 importation regulations or the personal importation and insulin reimportation policies included in the President’s Executive Order. The FDA received over a thousand comments on the proposed regulations, many of which raised concerns with the proposal. These concerns were voiced not only by opponents of importation, but also from those supporting the concept. The most common issues expressed included worry that the importation program requirements would be too burdensome for states to implement; questions about the safety of imported medications; concern it could lead to drug shortages in Canada; skepticism about whether there would be savings; and uncertainty about the safety of imported medications.
The Office of Management and Budget (OMB) would have to review any regulations before they are finalized. As of this writing, no such review has happened for the final December 2019 proposed importation regulations or any new importation policies. However, readers should note that OMB is currently reviewing a proposed rule from HHS that would implement international price indexes for Medicare Part B drugs. The President signed another executive order on this topic, but that Order has not yet been made public. Interested parties should be on the lookout for those proposed rules—and our insights—soon.
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