Skip to main content

Analysis

Azar Outlines Drug Importation Plan After Reversing His Position

By Steven Porter  
   July 31, 2019

The breadth of the plan's impact will depend in large part on proposals brought forward by the industry.

Health and Human Services Secretary Alex Azar touted the potential cost-curbing benefits Wednesday of importing drugs from foreign markets, outlining the Trump administration's two-pronged action plan to allow importation without undermining safety.

Azar's support for the idea contradicts the position he took in May 2018, when he said the notion of reducing prescription drug prices by importing product from Canada is "just a gimmick." He argued that drug importation would be ineffective and potentially dangerous.

Two months later, however, he directed the Food and Drug Administration to establish a working group to explore the possibility of permitting drug imports, signaling there might be some circumstances after all in which the practice—which is being explored by several states, including Colorado, Florida, and Vermont—could be done safely.

When asked during a press call Wednesday about his reversal, Azar said a lot has changed across pharmaceutical supply chains since the possibility of drug importation was last fully considered under the President George W. Bush administration, during which Azar served as HHS general counsel then deputy secretary. The supply chains are more mature and consolidated than they were in decades past, and the ability for pharmacies to conduct international business and track-and-trace supplies has advanced significantly, he said.

President Donald Trump is the first U.S. president to offer his support for drug importation, and Azar acknowledged that Trump's influence has shaped the path HHS has chosen.

"He is always pushing me, challenging me to find more solutions for patients," Azar said of Trump.

Azar was joined on the press call by Acting FDA Commissioner Ned Sharpless, MD, who expressed support for the ways Azar and Trump are trying to reduce drug prices and committed the FDA's resources to the cause.

"The FDA has a unique role to play in promoting competition that in turn can help reduce drug prices and improve access to medicine for Americans," Sharpless said in a statement. "Driving down drug prices requires a comprehensive approach and we must continue to look at all innovative solutions to this challenge."

There are two distinct pathways in the joint HHS-FDA Safe Importation Action Plan:

  1. Demonstration projects: Both HHS and FDA would propose to allow states, wholesalers, or pharmacists to develop demonstration projects, subject to HHS review, under which they would import certain drugs from Canada that are versions of FDA-approved drugs. The proposed rulemaking would be issued under authority of the Federal Food, Drug, and Cosmetic Act's Section 804, according to the joint announcement.
     
  2. New drug codes for imported products: The FDA would issue recommendations for drug makers seeking to import versions of FDA-approved drugs they sell in foreign markets. The manufacturers would be able to use a new National Drug Code (NDC) for these products, which could enable them to charge a lower price than their contracts currently require, according to the announcement. "This pathway could be particularly helpful to patients with significantly high cost prescription drugs," the announcement states. "This would potentially include medications like insulin used to treat diabetes, as well as those used to treat rheumatoid arthritis, cardiovascular disorders, and cancer."
     

There's still a lot of uncertainty over what final policies, if any, will be implemented based on this plan. The joint announcement described the two prongs as "potential pathways," and Azar said in the statement that these are pathways the administration "intends to explore."

Sharpless, too, acknowledged that many hurdles remain.

"We've been keenly focused on ensuring the importation approaches we've outlined pose no additional risk to the public's health and safety," Sharpless said in the statement. "We know there are many operational challenges to address through each of these pathways, and [we] are actively working through them as we look to formally announce these policies, with opportunity for public comment, in the coming months."

Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J. Ubl issued a statement calling the administration's plan "far too dangerous for American patients."

"There is no way to guarantee the safety of drugs that come into the country from outside the United States' gold-standard supply chain," Ubl said. "Drugs coming through Canada could have originated from anywhere in the world and may not have undergone stringent review by the FDA. Law enforcement has repeatedly warned that importation schemes could worsen the opioid crisis and jeopardize public safety."

"Moreover," he said, "Canadian officials have said that the policy is unworkable, and they will not risk shortages by diverting their medicine supply to the United States."

Wednesday's announcement comes at the end of a month that has dealt multiple setbacks to the administration's drug pricing policy agenda. A federal judge vacated a rule that would require manufacturers to include price information in TV ads for certain drugs, and the administration abandoned its ambitious proposal to effectively kill the rebates pharmacy benefit managers (PBM) negotiate with drug makers. (Azar had reportedly been at odds with White House advisers who wanted to weaken the rebate rule.)

The administration has also explored the possibility of imposing an index to reduce the price disparity between drug prices in the U.S. and abroad.

Editor's note: This story was updated Wednesday with a statement from PhRMA.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

An idea the HHS secretary described last year as a 'gimmick' is now part of the administration's plan to curb drug prices.

The plan includes two pathways. One would allow states and others to pitch demonstration projects. The other would allow manufacturers to import their own drugs.

The leaders of both HHS and FDA acknowledge that quite a few hurdles remain.


Get the latest on healthcare leadership in your inbox.