[Updated, 6:18 p.m. ET. See below.] The Trump administration unveiled Wednesday a long-awaited plan to import cheaper medications from Canada and other countries.
The US Department of Health and Human Services says the two proposals are part of the administration’s strategy to curb high prescription-drug prices, which has often been short on action despite the president’s tough rhetoric.
The details of the proposals may change as the public gets a chance to weigh in. Critics have already begun picking apart the details, but the announcement paves a path for drug importation, a policy that the biopharmaceutical industry has long opposed, citing concerns about the safety of products that come from abroad.
The first importation proposal would allow states, drug wholesalers, or pharmacists to develop demonstration projects showing how they would import drugs from Canada. These imported drugs would be versions of FDA-approved drugs manufactured according to FDA standards. To address safety concerns, applicants must show how they will comply with requirements such as drug labeling and the ability to track a drug from a manufacturing site to the pharmacy.
Under the second proposal, drug makers could import versions of the products that they sell in other countries. HHS says the companies could sell those versions in the US at lower prices. But a company would need to show the FDA that the drug for the foreign market is the same as the US version. HHS says this pathway could cover diabetes treatments such as insulin, as well as drugs for cardiovascular disorders and cancer.
Some observers say the proposals aren’t tough enough to bring down high prices. Evercore ISI analyst Umer Raffat wrote in a research note that the proposals leave ways for companies to avoid importing some drugs.
The first proposal excludes a wide swath of expensive drugs, such as biologics, intravenous therapies, and inhaled drugs. Also excluded are dozens of drugs that come with “risk evaluation and mitigation strategies” (REMS), which are plans to communicate a drug’s risks to both physicians and patients.
With these exclusions, the plan “isn’t quite that bombshell importation proposal that [Wall] Street had feared,” Raffat said in the note.
Another loophole is the requirement that drugs be eligible for importation only if the active ingredient in a product comes from a facility that also produces the FDA-approved version. Companies can get around that requirement by designating manufacturing facilities for these ingredients as US-specific, Raffat said. If they do that, he said, there won’t be any location that is providing ingredients for both FDA-approved drugs and foreign versions of the drug.
If the HHS proposals take effect, they could hurt the drug supply in Canada. David Clement, the Toronto-based North American affairs manager of the Consumer Choice Center, noted that Canadian pharmacies have experienced drug shortages in recent years. His group is concerned that a US policy change on importation could threaten the medication supply for patients in Canada. Clement added that drug manufacturers will be more reluctant to negotiate with Canada’s national health plan if medicines for the Canadian market will be exported to the US.
[Paragraph added with additional industry comment.] The biopharmaceutical industry was critical of the drug importation proposal. The Pharmaceutical Research and Manufacturers of America, a trade group, issued a statement reiterating its previously stated concerns about the safety of drugs that come from other countries. During a Wednesday evening earnings conference call, Vertex Pharmaceuticals (NASDAQ:VRTX) CEO Jeff Leiden noted that Canada does not have enough drug supply to meet the demand in the US. He added that the HHS proposals do nothing to encourage the industry to invest in the research and development of innovative new drugs. “We feel that type of legislation is completely inconsistent with our principles,” Leiden said.
The HHS importation proposals have the support of acting FDA Commissioner Ned Sharpless, who said in a statement that driving down drug prices calls for a comprehensive approach. Sharpless’s predecessor, Scott Gottlieb, opposed drug importation, citing safety concerns, although he formed a group last year before he stepped down to develop importation policies for medicines made only by a single manufacturer.