“President Trump has been clear: For too long American patients have been paying exorbitantly high prices for prescription drugs that are made available to other countries at lower prices,” Alex Azar, the secretary of health and human services, said in a statement released Wednesday.
The rising price of prescription drugs has been a popular topic at the Democratic presidential debates, and the timing of the administration’s announcement fell in the middle of the Tuesday-Wednesday schedule of this month’s debates for the Democratic candidates.
On Tuesday night, Sen. Bernie Sanders of Vermont, who has long supported the idea, said he traveled to Canada on Sunday with a group of consumers who were buying insulin at what they said was one-tenth the price they usually pay in the United States. Higher prices are being charged by “the crooks who run the pharmaceutical industry in America today,” Sanders said.
Many other countries negotiate lower prices because their health care systems are run by the government, giving them more leverage to bargain. In the United States, private insurers typically negotiate with drug companies on prices. The pharmaceutical industry argues that prices overseas are artificially low and that people in those countries often don’t get access to as many new drugs as Americans do.
The announcement signaled a major policy shift: Just a year ago, Azar described such importation programs as “gimmicks” and no other administration has allowed drug importation.
But the HHS plan has significant limitations and was short on details. The proposed rule would not apply to high-priced drugs like insulin or other biologic drugs like Humira because of exceptions included in earlier legislation. And the separate FDA guidance would permit importation of drugs, including insulin, only if the drugmakers agreed to take part in the plan.
“This is a plan to make a plan on importation,” said Rachel Sachs, a law professor and drug policy expert at Washington University in St. Louis. “This is not happening in the next week, in the next month or likely even in the next year because the administration will need to carry out the rule-making process.”
The proposal was welcomed as an initial step from lawmakers and groups like AARP. But it got a tepid response from Elizabeth Rowley, the founder and director of T1International, a diabetes advocacy group that organized a trip from the United States to Canada last month to help consumers buy insulin. She called the move a “Band-Aid.”
“This is kind of a distraction from the real issue, and the real problem,” Rowley said, “which is pharmaceutical companies are setting costs at exorbitant rates and patients are suffering and dying.”
Lobbyists for the drug industry swiftly denounced the proposal as well, repeating longtime arguments that allowing drugs to be imported from Canada could open the door to counterfeit products. “The administration’s importation scheme is far too dangerous for American patients,” the industry’s main trade group, the Pharmaceutical Research and Manufacturers of America, said in a statement. “There is no way to guarantee the safety of drugs that come into the country from outside the United States’ gold-standard supply chain.”
Democrats and Republicans in Congress have been debating legislation that would allow importation of drugs to obtain cheaper prices, and other measures to try to rein in costs. But leading members of Congress have said that major proposals won’t be fully prepared before September.
The new policy is an about-face for Azar, who like other Republicans has been skeptical about importing drugs from other countries.
In May 2018, Azar called the idea a “gimmick” and said: “They are a lovely neighbor to the north, but they’re a small one. Canada simply doesn’t have enough drugs to sell them to us for less money, and drug companies won’t sell Canada or Europe more just to have them imported here.”
But over the past year, the tone has shifted as Republican state leaders have joined Democrats in talking about importing drugs from Canada. Florida Gov. Ron DeSantis, favors such a plan, and in May, Trump directed Azar to help make it happen. Vermont also has a law allowing importation. But the federal government has not yet cleared any states to do so, and an HHS official said Wednesday that the regulations would need to be finalized before any applications could be evaluated.
Trump has railed against the idea that many countries pay less for drugs than in the United States, calling it a form of “global freeloading” because many treatments sold overseas were developed by U.S. companies.
In July, Trump said he was planning an executive order, a “favored-nation clause,” which would allow the United States to pay whatever the lowest price is in other countries. But his comments were vague, and it was unclear whether he was referring to a more limited pilot program being proposed by his administration that would apply to only a small subset of drugs administered by doctors and in clinics. There were also questions about how far any executive order could go without congressional legislation.
Several of Trump’s other proposals to lower drug prices have faltered recently, including efforts to force drug companies to list their prices on TV ads.
The importation proposal leans heavily on portions of a 2003 law that allowed states, pharmacies and distributors to apply to the federal government to import drugs from Canada. But that law, which also set up Medicare’s Part D drug coverage program, contained many exceptions, including controlled substances, injectable drugs and complex treatments known as biologics, like insulin.
The idea had also been rejected by previous commissioners of the FDA who raised concerns about importing counterfeit products that might be unsafe.
Azar said that the Trump administration was taking a different view. “The door was closed. What we are saying today is, we are open,” Azar said in a call with reporters Wednesday. “Work with us, convince us that you have a game plan that can work.”
He said that large, multinational drug distributors could manage a complex importation system, and that new so-called “track-and-trace” technology for prescription drugs minimized the risk of introducing counterfeits into the system. “There are hurdles, of course,” Azar said. “But the hurdles now are known and they’re being laid out and they are surmountable.”
But the plan received an unenthusiastic response from the trade group for pharmaceutical distributors, whose largest members operate in the United States and Canada. The group, the Healthcare Distribution Alliance, said that importation plans would be costly — potentially negating their value — and that distributors’ work to improve the tracking of drugs as required by a 2013 law “would be jeopardized.”
The administration said that it would require applicants like states to show how they would comply with federal tracking requirements and that it was considering other ways to comply with the tracking law.
Canada does not have a government-mandated tracking system, and it was unclear how distributors and manufacturers could comply if drugs intended for sale in Canada were imported to the United States, said Adam Fein, who studies the drug supply chain as chief executive of the Drug Channels Institute. “It’s just like bizarre,” he said. “Reading this action plan, it reads as if it was written 15 years ago.”
Fein and others also said the second piece of the importation plan — creating guidelines for companies that want to import their own drugs from Canada — was likely to be limited. In many cases, drugmakers have little incentive to create competition with their own high-priced drugs in the United States.
And they already have another avenue — by creating something called an authorized generic — to sell a cheaper version of their product to consumers who are paying the full price for their drugs. In March, Eli Lilly began selling a half-price authorized generic of its Humalog insulin, in an effort to head off criticism over its high prices. Mylan did the same in 2016 with its EpiPen emergency allergy treatment.
Canadian officials have warned the U.S. government that importation programs could jeopardize their own supply of drugs, leading to potential shortages, according to a Reuters report. Others have said drug companies could limit their supplies to those countries or raise their prices in response to any new U.S. policy.
Amir Attaran, a law and medicine professor at the University of Ottawa, noted that Canada’s population is one-ninth that of the United States’. He compared a large-scale importation plan to “transfusing the blood of a mouse to an elephant. The mouse is not going to survive that.”