Here comes drug importation

Trump administration drops its bombshell proposal to open up the US pharmaceutical market


Call it an early Christmas present to the legal staffs of pharma manufacturers, Washington trade associations and healthcare policy groups: The Trump Administration wants to start a drug-importation program from Canada for both small-molecule and biologic products. The program would be a “time-limited Section 804 importation program” (SIP), with the SIP program sponsored by “a pharmacist, a wholesaler, or another State or non-federal governmental entity” and subject to FDA review. Additional language in the notice of proposed rulemaking (NPRM) gives guidance on how manufacturers themselves could set up reimportation. The NPRM is available in draft form today (Dec. 18), and is expected to be published officially in the Federal Register on Dec. 23. That date kicks off a 75-day comment period, after which a proposed final rule would come out of FDA.

The two reimportation pathways “are historic actions by HHS and the FDA, and they represent the bold nature of President Trump’s agenda for lowering drug costs,” said HHS secretary Alex Azar. “The President has recognized the opportunity to lower costs for American patients through safe importation, and we at HHS and FDA are delivering on that possibility through a safe, commonsense approach.”

Reaction was swift: “The idea that this plan will result in savings for patients at the pharmacy counter is a talking point that’s been debunked by nonpartisan budget experts and past FDA commissioners who served under both Republican and Democratic administrations,” said Jim Greenwood, president and CEO of the Biotechnology Innovation Organization (BIO). “Following the recent vote on Speaker Pelosi’s extreme drug pricing plan, today’s announcement is the latest empty gesture from our elected lawmakers who want us to believe they’re serious about lowering patients’ prescription drug costs. It’s time Congress and the administration delivered a holistic solution that protects the health and well-being of patients and ensures medicines are affordable.”

“Such policies will … threaten patient safety without any meaningful cost reductions,” stated the Healthcare Distribution Alliance. “Significant concerns remain about the feasibility of an importation program from an operations perspective. Further, as an HDA Research Foundation study indicates, federal importation policies would lead to at least $1.1 billion in unforeseen costs for the healthcare system, regulators and patients alike.”
Ironically, one of the current programs the US pharmaceutical supply chain is adjusting to—the Drug Supply Chain Security Act (DSCSA)—is claimed by HDA as a significant obstacle to the practicality of reimportation, and at the same time is cited in the NPRM as an enabler of reimportation. Pharmaceutical supply chain “have continued to mature and consolidate, and the ability of companies engaged in the transaction of drugs to conduct business internationally and trace their products has strengthened. This maturation has further grown since 2013, following and due in part to the enactment of the Drug Supply Chain Security Act.”

HDA’s take: “Such policies will … jeopardize the collaborative effort under way to implement the Drug Supply Chain Security Act.”

Some background
“Drug importation” is something of a misnomer, since many drugs are conventionally imported today under strict manufacturer and FDA oversight; for this reason, many people on the subject use the term “reimportation.” In any case, manufacturers are usually subject to individualized requirements for labeling and validation in the countries where their products are used. Under longstanding US policy, FDA authorizes manufacturers to market their products manufactured at facilities approved by FDA, wherever that site might be. The Trump plan specifies that this oversight would also apply to products that had been produced for, and labeled in accordance with, other countries to be eligible for importation. Either the importing entity (presumably, Canadian wholesalers) or the SIP sponsor would be responsible for relabeling the products to meet US standards (including the serialized codes basic to DSCSA).

The NPRM also specifies that SIP sponsors are obligated to collect data on cost savings to consumers, and report that data to HHS. Given the convoluted state of drug pricing and reimbursement today, that will be a significant undertaking all by itself.

The NPRM is a 172-page opus; its writers have anticipated many of the industry arguments against importation—but it remains to be seen how successful they will be in finalizing the rules. At the same time, numerous states have, or are, developing regulations to enable importation, so the battle will go on on both the state and federal levels.