Drugs From Canada
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Large majorities of Americans think that prescription drug prices are too high, and support measures to lower them. A Kaiser Family Foundation poll from last September found that 71 percent supported importation of medicines from Canada.
The high cost of prescription drugs continues to be a top health priority for the public. Policymakers at the federal and state level are pursuing a range of options to lower drug prices for Americans, one of which would allow for the safe importation of prescription drugs from Canada and other countries, based on evidence showing that people often pay more for medications in the U.S. than elsewhere. In an executive order issued July 2021, President Joe Biden directed the Food and Drug Administration (FDA) to work with states to import prescription drugs from Canada, an approach that was put into place by the previous Administration and has bipartisan support among the general public (Figure 1).
Current law allows for the importation of certain drugs from Canada under defined, limited circumstances, and only if the Secretary of the United States Department of Health and Human Services (HHS) certifies that importation poses no threat to the health and safety of the American public and will result in significant cost savings to the American consumer. In September 2020, the Trump Administration issued a final rule and final FDA guidance, creating two new pathways for the safe importation of drugs from Canada and other countries, and then-HHS Secretary Alex Azar certified that importation of prescription drugs poses no risk to public health and safety and would result in significant cost savings.
Many studies have shown that people in the United States often pay more for their prescription drugs than in other developed countries, including Canada. According to one analysis of a subset of single-source brand-name drugs, Canadian drug prices are about 28% of the price in the United States, while another analysis of a broad range of drugs found that Canadian prices are 46% of those in the United States.
The Medicare Modernization Act of 2003 (MMA) amended the Section 804 importation language that was added by the MEDS Act. The MMA specifies that wholesalers and pharmacists can only import prescription drugs from Canada, not other industrialized countries. The MMA also authorizes the Secretary to terminate such importation programs if they do not meet safety standards or result in a significant reduction in costs for consumers. The MMA also requires the HHS Secretary to issue regulations that would grant waivers to individuals to import drugs for personal use under certain circumstances.
Importation of prescription drugs under conditions set forth first by the MEDS Act, and then by the MMA, could allow wholesalers and pharmacists to obtain FDA-approved drugs at lower prices than are available in the U.S. by purchasing them from foreign sellers, and pass these savings on to U.S. consumers.
In September 2020, the Trump Administration issued a final rule and final FDA guidance for the importation of prescription drugs. The final rule would authorize states, territories and Indian tribes, and in certain future circumstances wholesalers and pharmacists, to implement time-limited importation programs, known as Section 804 Implementation Programs or SIPs, for importation of prescription drugs from Canada only. States, territories, and Indian tribes could submit proposals to the HHS Secretary to manage these SIPs and act as SIP sponsors.
In order for a proposal to be approved by HHS, a SIP sponsor would need to specify: the drugs it seeks to import; the foreign seller in Canada that would purchase the drug directly from its manufacturer; the importer in the U.S. that would buy the drug directly from the foreign seller in Canada; the re-labeler or re-packager of the drug itself that would ensure the drug meets all labeling requirements in the U.S.; the qualifying lab that would conduct testing of the drug for authenticity and degradation; and steps that would be taken by the SIP to ensure the supply chain is secure. SIPs would initially be authorized for 2-year periods with the possibility of 2-year extensions.
Under the final rule, which allows states and other entities to facilitate importation of drugs from Canada, only drugs that are currently marketed in the U.S. would be eligible for importation. As under current law, certain types of drugs are excluded from the definition of a prescription drug eligible for importation including: controlled substances, biological products (including insulin), infused drugs, intravenously injected drugs, and inhaled drugs during surgery. Furthermore, drugs that are subject to risk evaluation and mitigation strategies (REMS), which are high-risk products with serious safety concerns, such as opioids, are not eligible for importation.
Under the final FDA guidance, which allows manufacturers to import drugs to the U.S. that were manufactured and intended for sale in other countries (not limited to Canada), prescription drugs, including biological products excluded under the final rule, could be imported and made available to patients. These drugs must also currently be marketed in the U.S. to be eligible.
In most circumstances, it is illegal for individuals to import FDA-approved drugs from other countries for personal use. However, based on changes enacted by the MMA, personal importation of prescription drugs that have not been approved by the FDA for use in the U.S. is permitted on a case-by-case basis. Under this statutory authority, FDA has put out guidance that lays out certain circumstances where importation of non-FDA approved drugs for personal use might be allowed. For example, personal importation is generally allowed if the treatment is for a serious condition, there is no effective treatment available in the U.S., and there is no commercialization of the drug for U.S. residents. Typically, only a three-month supply is allowed, and individuals most confirm in writing that the drug is for personal use and provide information about the physician responsible for their treatment.
Many stakeholders have expressed reservations about the feasibility of the current importation plans. Prime Minister Trudeau stated that ensuring the safe and adequate supply of prescription drugs for Canadians is his first priority. However, he also said the Canadian government will take into account the actions of the United States and may be able to provide help to the US and other countries. The Government of Canada stated that it would be unable to meet the needs of the U.S. market without impacting access to medications for Canadians. The Canadian government also expressed concern that this policy would create drug shortages in Canada, and issued an order in November 2020 prohibiting the distribution of drugs that could cause or exacerbate a shortage.
Some organizations also submitted comments for the importation pathway described in the final FDA guidance. Despite their support for the flexibility to sell drugs under different NDC codes, PhRMA had specific concerns with guidance, including that NDC flexibility alone is not enough to lower prices for consumers. The American Medical Association (AMA) and APhA also expressed concern with the FDA guidance, noting the potential for unintended consequences, including increased costs for patients and patient and pharmacy confusion, leading to disruptions in patient care.
Delays in the submission of new drugs in the United States, the European Union and Canada. A submission delay is the interval between the date a drug is first submitted to any of the three jurisdictions and the submission date in a specific jurisdiction.
The FDA offers programs that may enable early submission for new drugs for serious conditions where no acceptable treatment exists: fast-track status and accelerated approval. Fast-track status offers a rolling review in which modules of the application are submitted as they are completed. For these cases, the date of submission of the first module is considered the date of submission for the application. Accelerated approval allows firms to use surrogate outcomes that are not well-established.2 These programs allow companies to submit what are essentially incomplete applications, which would generally not be acceptable at Health Canada. (Health Canada is currently developing a program for orphan drugs. Consideration will be given to the small size of the patient population for the development, evaluation and approval of these drugs.3) These FDA programs are heavily used for orphan drugs, as reported by Seoane-Vazquez and colleagues.4 In 2004, the European Medicines Agency created a similar program (conditional marketing authorizations) that permits submissions for new drugs that address unmet medical needs, even when comprehensive clinical data have not been provided. However, conditional authorizations were not empirically important during the period of our analysis: as Joppi and colleagues5 showed, only 2 of the 44 orphan medical products approved by the European Medicines Agency between 2000 and 2007 had conditional authorizations.
To explore the capacity hypothesis, we compared submission delays by size of pharmaceutical company. Larger companies were those ranked as the top 30 in terms of sales (ranked by SCRIP Intelligence, www.scrip100.com). Half of the 259 new drugs in our sample were marketed by these companies.
Given the narrow range of therapeutic options in specialty drug classes for serious conditions, we assumed no change in product selection in 6 specialty drug classes that accounted for 14% of all retail sales: biologic agents for inflammatory conditions, antineoplastic agents, antiretroviral drugs for HIV, drugs for multiple sclerosis, drugs for glaucoma and drugs for ocular vascular conditions (e.g., macular degeneration). Changes in the costs of these medications in our analyses stemmed only from changes in use and changes in the price of brand-name and generic drugs. 59ce067264