Bill to allow imported drugs from Canada aims to create competition

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As lawmakers grapple with addressing sky-high drug prices, the debate around allowing importation of lower-priced versions of the same branded medications from Canada has again cropped up in policy circles.

Sen. Bernie Sanders (I-VT) has been a major advocate, first proposing an amendment in January that would have allowed importation and then a month later introducing the Affordable and Safe Prescription Drug Importation Act. That bill would create a legal pathway for U.S. pharmacies to import lower-priced versions of branded medications from Canada and possibly other countries.

The Congressional Budget Office has estimated that Sanders' bill would save the U.S. federal government nearly $7 billion over the next decade. But a number of influential stakeholders, including drugmakers and former FDA commissioners, have expressed concern about whether the legislation would increase safety risks.

See also: The drug industry wins pricing battle in California, likely to fare better with Trump

The pharma industry's message, facing the potential of new competition for its products, is blunt. “Proposals to allow the importation of prescription medicines from Canada ignore the dangerous threat to patients of counterfeit and adulterated medicines,” a PhRMA spokesperson wrote in a blog post in February.

In March, four former FDA commissioners, including Drs. Margaret Hamburg and Robert Calif, published a letter arguing that allowing drug imports adds risks to “a carefully constructed system that guards the safety of our nation's medical products.” If allowed, imported drugs would not be approved by the FDA, which lacks the resources to begin regulating those products. Dr. Scott Gottlieb, the current FDA commissioner, has said he is opposed to importing drugs from other countries.

"Even if spot-checking discovered a dangerous or counterfeit product, in the absence of the closed system currently in use, there would be no way to trace that product to its origin or intervene to protect other consumers before irreparable harm occurs,” the letter from the former commissioners said. “The FDA lacks the resources needed to oversee a major importation program.”

In years past, the FDA has imported drugs from other countries to address extreme cases of drug shortages. Under Hamburg's leadership, the regulator allowed chemotherapy Lipodox to be imported to the U.S. in 2012. The move was made in response to dwindling supplies of Johnson & Johnson's version of the cancer drug, Doxil.

An estimated 8% of American consumers already buy prescription drugs from Canada and other countries because they are cheaper,a poll conducted by the Kaiser Family Foundation found. “Allowing the importation of safe and affordable prescription drugs is overwhelmingly supported by the American people,” Sanders said in a policy statement.

See also: Mylan CEO defends EpiPen strategy, questions pricing model in the U.S.

Importation is also supported by some lawmakers. The January amendment was voted down, 52 to 46 — a closer-than-expected margin. At least a dozen Republican lawmakers voted in favor of the amendment. Some Democratic lawmakers who voted against it cited safety concerns, according to media reports.

Sanders' bill, introduced in late February, would require HHS to allow wholesalers, pharmacies, and individuals to import prescription drugs manufactured at FDA-inspected facilities that are operated by licensed companies in Canada. In the policy statement, the senator said that Canadian pharmaceutical manufacturing standards are comparable to U.S. regulations, citing a 2016 report conducted by the Senate Special Committee on Aging.

Experts say there isn't much of a difference in how generic drugs are priced in the U.S. and Canada, which operates a national health system that negotiates drug prices with drugmakers and can take into account cost-effectiveness data. It is against the law for the FDA and the CMS to consider price when approving a therapy or making a coverage decision, respectively.

As a result, allowing importation from Canada or other countries would likely to negatively impact market share for the makers of higher-priced branded medications.

See also: Genentech urges broader adoption of value-based payment models

“Price controls, either imported or created domestically, would definitely hurt the profits of the life-science industry,” said John Kamp, executive director of the Coalition for Healthcare Communication. “Take out the profits and down go the incentives to create new products and the ability to speed the adoption of innovations through marketing.”

In the days before the CBO released its estimate, three physicians affiliated with Partners HealthCare in Massachusetts published a perspective piece in the New England Journal of Medicine. In it, they contended that allowing the importation of certain drugs would encourage competition and ensure that patients could afford their prescription drugs.

“Importing safe and effective medications from countries with more patient-friendly drug pricing, including our neighbors to the north, represents one potential solution,” Drs. Michael Fralick, Jerry Avorn, and Aaron Kesselheim, wrote in the NEJM commentary.

In the long term, the Pew Charitable Trusts believes that increased competition from imported drugs could put pressure on drug companies to reduce the prices of their products in the U.S. But Pew also said that allowing importation may lead drugmakers to alter their pricing strategies, potentially raising prices in other countries to offset losses in the U.S.

“[Importation] has to happen at a pretty large scale to be meaningful,” said Allan Coukell, Pew's senior director for health programs.

See also: Drugmakers, facing pricing criticism, sell cures in new ads

Drug prices have become a major focus for both U.S. political parties in recent years. Criticism of the industry's pricing practices has already led to changes, with Allergan and AbbVie promising publicly to limit price hikes for a given product to no more than 10% each year. Companies which based their business models around egregious price hikes, including Valeant Pharmaceutical Industries, have struggled to replicate past financial performance.

The current debate isn't the first time the question of drug importation from Canada has  come up in Washington. During the policy discussions leading up to the passage in 2003 of the Medicare Modernization Act, which established Medicare Part D's prescription drug coverage, the issue was front and center. At that time, seniors were buying prescription drugs from Canada because prices were lower than what they would have paid in the U.S. under existing Medicare coverage.

“The health and safety risks faced by the many Americans who cannot afford medications necessitate consideration of alternative strategies to provide less expensive medications,” the NEJM perspective concluded.

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