How payers make money
November 19, 2019

Proposed rule to import drugs from Canada

HHS releases proposed rule to import drugs from Canada to lower the price for consumers

Drug companies have said they are hamstrung by the current pharmacy benefit manager system, says HHS Secretary Alex Azar.

The Department of Health and Human Services has released a proposed rule this morning that proposes to lower the price of drugs for consumers by allowing pharmaceutical manufacturers to import certain prescription drugs from Canada.

In addition, the Administration has announced the availability of a new draft guidance for the industry that describes procedures drug manufacturers can follow to facilitate importation of prescription drugs, including biological products, that are FDA-approved, manufactured abroad, authorized for sale in any foreign country, and originally intended for sale in that foreign country.

Manufacturers of brand name drugs want to offer them in U.S. market, but are not readily able to do so, according to HHS Secretary Alex Azar.

The proposed Food and Drug Administration rule is needed to get around the current system in this country in which pharmacy benefit managers get rebates off of the list price of drugs and give those rebates to insurers. Insurers use the rebates to lower premium costs for all consumers.

“Drug companies have said if we could only get a new drug code, we could lower prices,” Azar said.

They haven’t been able to do so because of middlemen, he said.

To be eligible for importation, a drug needs to be approved in the U.S and meet conditions in a new FDA drug application.

The imported drugs may not be sold with foreign country labeling.

Azar first announced the initiative in July.


WHY THIS MATTERS

Other countries pay lower prices for the same drugs.

The ultimate policy objective is to provide consumers with lower prices on drugs that have the same standard of high quality, Azar said.

Individuals are going to Canada to get drugs or ordering them online, a system that has no verification for safety, Azar said.

The rule must be shown to result in a reduction in price to the American consumer, and not just the government, according to Azar.

Azar said no estimate of cost savings has yet to be projected.

It will be up to individual states to come forward with plans for importation once the rule is finalized. Also, other non-federal government entities may submit importation program proposals to the FDA for review and authorization. An importation program could be co-sponsored by a pharmacist, a wholesaler, or another state or non-federal governmental entity.

The proposed rule will have a 75-day comment period before a final rule is released, he said.


THE LARGER TREND

In July, Azar and Acting Food and Drug Administration Commissioner Ned Sharpless laid out the Safe importation Action Plan for two drug importation pathways.

The first pathway limits which drugs may be imported from Canada. Non-eligible drugs include controlled substances, biological products, infused drugs, intravenously injected drugs, drugs inhaled during surgery and certain parenteral drugs.

There must be assurances that the importation poses no additional risk to the public’s health and safety and that the demonstration projects would achieve significant cost savings to the American consumer.

Applicants must demonstrate how they would track and trace requirements to allow drug tracing from manufacturers to pharmacy, meet labeling requirements and importation entry requirements. They must also be able to meet post-importation requirements such as adverse event reporting and procedures to facilitate recalls.

Under the second pathway, manufacturers would use a new National Drug Code (NDC) for the products, potentially allowing them to offer a lower price than what their current distribution contracts require.

To use this pathway, the manufacturer or entity authorized by the manufacturer would establish with the FDA that the foreign version is the same as the U.S. version and appropriately label the drug for sale in the U.S.

This pathway could be particularly helpful to patients with significantly high prescription drug costs. Medications could include insulin to treat diabetes, as well as drugs used to treat rheumatoid arthritis, cardiovascular disorders and cancer.


ON THE RECORD

“For the first time in history, HHS and FDA are open to drug importation,” Azar said.