HHS Unveils Proposed Rule on Drug Importations

Stakeholders will have the next 75 days to comment on the proposed rule, which largely follows an outline HHS provided in July.

Health and Human Services Secretary Alex Azar unveiled a two-pronged proposed rule Wednesday that lays the groundwork to allow states and drug companies to import prescription drugs from Canada.

"New pathways for importation can move us toward a more open and competitive marketplace that supplies American patients with safe, effective, affordable prescription drugs," Azar said Tuesday afternoon during a call with reporters.

Azar said the proposed rule would allow for the importation of the kinds of drugs consumers would obtain from a retail pharmacy, but it would exclude controlled substances and IV drugs, including insulin.

Under the "first pathway" of the proposed rule, the Food and Drug Administration sets the rules that would authorize states, potentially working with wholesalers, to develop programs that allow for drug importation of FDA-approved drugs.

"We appreciate the strong interest and leadership we've seen regarding this possibility from governors in both parties," Azar said, noting that Florida, Maine, New Hampshire, Colorado and Vermont have expressed an interest in the plan.

HHS's proposed "second pathway" provides draft guidance for drug makers to import FDA-approved drugs when the drug is made abroad, authorized for sale in any foreign country, and originally intended for sale in that foreign country.  

Azar said the second pathway would allow drug makers to sidestep middlemen pharmacy benefits managers and the "bizarre way in which we pay for drugs in the United States" that passes rebates to insurance companies and sticks consumers with list prices.  

"What drug companies have told us, and we'll have to see if they live up to this, is that if they could only get a new national drug code for that exact same drug, that they could issue that drug at a lower list price, bringing savings to patients at the pharmacy counter," Azar said.

"And so the second pathway says, if you're a drug company and you're selling the exact same product in Europe or Canada or Japan and you would like to bring that same product in the United States to basically compete against your own product but at a lower list price, that we will give you a new national drug code to be able to do that," he said.

Stakeholders will have the next 75 days to comment on the proposed rule, which he called "largely consistent" with an outline HHS provided in July.

"This is the fleshing out of all the legal and implementation parameters of it," he said

Azar provided no firm date on when the rule would take effect, but he said HHS is moving "as quickly as humanly possible."

"As for pathway two, that guidance may perhaps be able to move even faster, given the fact that that that's a guidance procedure on issuing new drug codes," he said.

PhRMA Pans the Proposal

Pharmaceutical Research and Manufactures of America President and CEO Stephen J. Ubl dismissed the proposed rule as "a political maneuver."

"At a time when there are pragmatic policy solutions being considered to lower costs for seniors at the pharmacy counter and increase competition in the market, it is disappointing the Administration once again put politics over patients," Ubl said in prepared remarks.

"The Administration chose to proceed with an importation scheme that could endanger American lives, could worsen the opioid crisis and has been called unworkable by Canadian officials," Uble said. "Instead, they could have worked with stakeholders to develop and advance meaningful solutions that would directly benefit patients."

Nonetheless, Ubl said PhRMA would review the proposal and provide feedback "with the hope that no patients are endangered by this political maneuver."

Only FDA-approved Drugs are Eligible

Assistant HHS Secretary Admiral Brett P. Giroir, MD, said that drugs eligible for importation would need to be approved by Health Canada and would need to meet the conditions in an FDA-approved new drug application.

"Essentially, eligible prescription drugs are those that could be sold legally in either the Canadian market or the American market with appropriate labeling," he said. "Eligible prescription drugs would have to be relabeled with the required U.S. labeling and undergo testing to ensure that they are authentic, not degraded, and in compliance with established specifications and standards."  

"Importantly, the products imported under the pathway described in the draft guide could be available to patients in a variety of settings, including hospitals, healthcare providers' offices and licensed U.S. pharmacies and would include the FDA-approved labeling," Giroir said.  

Giroir said the draft guidance does not address generic drugs, "because we are not aware of similar private market challenges for reducing the cost of generic drugs."

"However, the agency is soliciting comments from manufacturers of generic drugs, and other interested stakeholders on whether it would be appropriate to provide guidance on a similar import approach for generic drugs," he said. 

Azar said HHS has not done any estimates on the potential cost savings under the proposed rule "because we do not know which states will come forward with plans once a rule is finalized."

"We don't know what those plans will be. We won't know which particular drugs would be in their plans and we don't know the volumes. It's undefinable for purposes of cost projection, at this point," he said.   

'This is Not a Silver Bullet'

Speaking to reporters Wednesday in Tallahassee, Florida Republican Gov. Ron DeSantis called the proposal "just one step in the grand scheme of things."

"This is not a silver bullet. This is one step in a long process that we've got to go through and obviously we in Florida don't control all of it," he said. "I'd much rather be here, moving forward, than just being on the sidelines chirping and saying 'Oh why doesn’t somebody do something about it." 

DeSantis noted that a quarter of the Florida's Department of Corrections' healthcare budget goes for prescription drugs. "So, even if you get some modest savings out of this for them, that could be tens of millions of dollars in savings for the state of Florida," he said.   

Azar, who attended the Wednesday press conference in Tallahassee with DeSantis, said he hopes the Canadian government "will work with us" to facilitate the importation plan.

"Obviously, the Canadians are going to be looking at for Canadians just as the president and myself and Governor Santos we're here to put American patients first," he said.

"But as long as they're getting lower prices, as long as they are free-riding off of American investment in innovation, the president is committed to ending foreign free-riding and we're committed to bringing the lower price discount products to the United States."

"If the drug companies are willing to give discounts to other countries that are similarly positioned economically to the United States, then the United States, where we are the largest pharmaceutical market in the world, we ought to be getting deals like that," he said.

In a separate announcement on Wednesday, the Associated Press reported that New York Democratic Gov. Andrew Cuomo plans to create a commission to investigate the potential benefits of importing prescription drugs from Canada.