- The Trump administration on Wednesday took a first step toward allowing the importation of drugs from foreign countries like Canada, unveiling two proposals that it hopes will help achieve its goal of lowering pharmaceutical prices in the U.S.
- One part of the administration's plan, issued by the Food and Drug Administration as a proposed rule, would create a pathway for states to import drugs from Canada through programs authorized by the agency. The second part, contained in a draft guidance, is designed to help drugmakers reroute medicines intended for foreign markets to the U.S., potentially at a lower price.
- Drug importation as policy has a long history, but was rejected in the past over concerns of supply chain security and regulatory resources. That it's been revived and put into motion by a Republication administration is notable, although the cost-saving impact of either plan announced Wednesday isn't clear.
The administration's proposals were expected, having been largely laid out in an "action plan" released in July. Still, the release of the draft rule and guidance start a regulatory process for the creation of two drug importation pathways.
"There has been a long-standing debate about the role importation can play in a safe drug supply chain, and there have always been questions about how effective importation can be at lower costs," said Health and Human Services Secretary Alex Azar on a call with reporters. "Supply chains and markets have changed over time. President Trump has been bold enough to recognize the opportunities we have on importation and he is delivering solutions."
While the administration painted its plan as a historic step toward lower drug costs, both plans come with notable limitations and uncertain effects. The Department of Health and Human Services declined to estimate potential savings or costs, noting that until it sees importation proposals from states it won't have a clear sense of those programs' scope.
States do appear interested, with the governors of Florida, Vermont, Maine and New Hampshire all expressing some support for the administration's efforts.
Under the draft rule, states and other non-federal government entities could submit importation programs to the Food and Drug Administration for review. Eligible drugs must already be FDA-approved, authorized for sale in Canada and carry similar labeling. But biologics, such as AbbVie's Humira, and other high-cost injectable drugs would be excluded due to limitations in the law upon which HHS is relying. So too would be medicines approved under Risk Evaluation and Mitigation Strategies programs, which describe limits on how such drugs are distributed.
Scott Gottlieb, a former Trump administration FDA commissioner, characterized on Twitter the restrictions as "stringent," noting that "while it may sharply limit who can actually import Canadian drugs under this framework, it maintains critical FDA safeguards to protect consumers."
Speaking on a conference call, HHS' Azar described the program as a "proof of concept" that Congress may want to expand to include more complex drugs that involve cold chain storage or complicated distribution.
States must also identify the foreign seller in Canada that will purchase products directly from manufacturers, suggesting drugmakers would have some say in whether their drugs could be subject to importation into the U.S.
The second pathway would also rely on drugmakers, establishing a process by which companies could obtain a new National Drug Code for product that had been manufactured for and intended for sale in foreign countries. HHS' logic is that contracts between drugmakers and pharmacy benefit managers in the U.S. can artificially limit a company's ability to lower prices on its drugs because of high negotiated rebates.
A new NDC code could allow those companies to import the same product at a lower price, HHS said, although it didn't clarify why a drugmaker may want to do that. This proposal would mainly be for branded drugs with extremely high rebates in the U.S., Azar said.
The Trump administration has made drug prices a policy priority, but its efforts to date have mostly come undone. A proposal to require drugmakers list prices in television ads was defeated in court, while a rule centered on drugmaker rebates was later withdrawn.
A third proposal to link reimbursement in federal healthcare programs to prices paid abroad remains in development.
In Congress, meanwhile, the House of Representatives recently passed sweeping drug pricing legislation that would go much further than many of the administration's proposals, although the Senate is unlikely to take up the bill. President Donald Trump has backed a competing plan negotiated by Senate Finance Committee leaders.