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Border Fight: Trump’s Plan To Import Cheaper Drugs From Canada Faces Hurdles

December 19, 2019

In a historic shift, the federal government Wednesday proposed allowing states to import drugs from Canada. Officials said they believe it can be done safely and save significant money for Americans.

But U.S. consumers looking for relief from the high cost of prescriptions should not expect the strategy to provide help anytime soon ― at least not before 2021. And many expensive medications will be excluded, including injectables such as insulin, controlled substances such as opioids, and biological drugs.

The prices of many prescription drugs are cheaper in Canada than in the U.S. since most developed countries set price controls on medicines.

As a result, many Americans have traveled across the border for decades to buy drugs or used internet sites to order drugs from Canada and other countries — even though federal officials say it’s technically illegal and dangerous.

Nancy LeaMond, executive vice president of AARP, welcomed the administration’s move. “The ability to import lower-priced medicines would help states manage their ever-tightening budgets, save taxpayers’ money, and lower drug costs for its citizens,” she said in a statement.

Yet critics say the administration’s plan ― offered in a 169-page proposed rule seeking comments from states, drugmakers and other stakeholders ― has more to do with President Donald Trump seeking to shore up reelection chances for 2020 than bringing dramatic changes to how people afford drugs.

One sign of that was Health and Human Services Secretary Alex Azar’s trip to Florida’s State Capitol to make the drug importation rule announcement with Gov. Ron DeSantis. Florida, Trump’s recently “adopted” home state and an electoral-voter-rich target for presidential candidates, is the largest of five states looking for federal permission to import drugs from Canada. The others are Maine, Vermont, New Hampshire and Colorado.

Neither Azar nor the administration’s document had an estimate on how much Americans or states could save from the importation plan or what it would cost to operate. Azar also refused to predict when anyone would get help from the implementation plan.

“There are a whole range of obstacles ― both legal, logistical and political to this ever moving forward,” said Rachel Sachs, an associate professor of law at Washington University in St. Louis who follows drug regulation policy.

Here are some of those hurdles:

Will Canada Play Ball?

The Canadian Pharmacists Association called on the Canadian government to oppose the importation plan, arguing that it could cause a shortage of drugs there. Even if Canada were willing to help — a big if — it’s unlikely the country of 37 million people would be big enough to help in a big way. (California alone has 40 million people.)

“It is important to recognize that Canada’s market for pharmaceuticals is too small to have any real impact on U.S. drug prices,” Kirsten Hillman, Canada’s acting ambassador to the U.S., said in a statement following her meeting in November with Joe Grogan, Trump’s domestic policy chief.

Big Pharma Isn’t On Board.

The drug industry has a lot to lose if drug importation is allowed because its prices in the United States could be dramatically reduced. And it’s going to fight any efforts to allow that to happen. Investors showed little concern as drug stocks were either up or little changed after the HHS announcement.

Azar said the administration is counting on global wholesalers and distributors to work with states to import Canadian drugs. But major drug manufacturers are expected to pressure those companies against doing this, Sachs said.

In addition, the drug industry could turn to Congress to help stop any importation initiatives. PhRMA, the pharmaceutical industry trade group, showed its might on Capitol Hill this year, helping to quash Trump’s drug-pricing bill, which was one of the administration’s top priorities. And neither of the major bills being considered by Congress includes an importation clause.

The drug industry said its long-standing concerns about drug safety remain firmly in place.

“It is disappointing the Administration once again put politics over patients,” PhRMA President and CEO Stephen Ubl said in a statement. “The Administration chose to proceed with an importation scheme that could endanger American lives, could worsen the opioid crisis and has been called unworkable by Canadian officials.”

The Plan Still Has To Pass Legal Muster.

The 2003 law creating the Medicare prescription drug program gave the secretary of Health and Human Services authority to permit the importation of prescription drugs. But such a policy could take effect only if the secretary certified to Congress that the implementation will “pose no additional risk to the public’s health and safety.”

No HHS secretary has made such a certification, although Azar has indicated he would be the first.

Even if HHS approves a final plan from a state, the pharmaceutical industry is likely to challenge it in court, where other administration health policies have been stalled or blocked.

Public Expectations Are High But Impact Could Be Low.

After months of study, Florida and Vermont have identified only a couple dozen drugs — many of them to treat HIV and cancer ― where importation from Canada would save the states significant money. That means the large majority of people buying drugs won’t get any help from importation.

Trish Riley, executive director of the National Academy for State Health Policy, said importation is designed to deliver only a small number of expensive drugs for people who have no coverage or have high deductibles or copayments.

DeSantis said importation is not a “silver bullet” to the nation’s high drug prices. “This is one step in a long process” in helping Floridians get cheaper drugs from Canada. A paper that the DeSantis administration published in August estimated Florida’s Medicaid program and other state agencies could save about $150 million a year by importing drugs, a tiny fraction of its overall pharmaceutical spending.

Can States Meet HHS Safety Requirements?

Azar said states will have to prove how they can hire vendors to connect the Canadian and United States drug distribution systems and adequately track and test drugs as they make their way across the border. The task is complicated and it remains unclear if states will be able to do this, Sachs said.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.