3 Key Gaps in the Proposed Drug Import Policy
In mid-December, the Trump administration made moves in favor of allowing drugs to be imported from Canada. The policy change is an attempt to lower the astronomically high prices that American consumers face. The U.S. Food and Drug Administration (FDA) has proposed a two-pronged approach:
- A new rule that will open the door for states to do business with Canada by way of importation programs that have been “authorized by the Agency”.
- An FDA guidance aimed at U.S. manufacturers to help them obtain a new national drug code (NDC) for products approved by a non-U.S. regulatory authority and originally intended to be marketed outside the U.S. to be made available domestically.
The administration hopes these two proposals will increase access to drug and biologic products from markets outside the U.S., thereby lowering drug costs and by extension, positively impacting public health. While the cause is noble, there are three key gaps, in my opinion, that need to be addressed for such an effort to have the desired effect on U.S. prescription drug and biologic prices.
FDA is charged with ensuring prescription products are safe and effective for their intended purpose. In the proposed rule, FDA uses the phrase, “authorized by the Agency”. The latest proposal harkens back to the import/export rules the industry faced in the 80s and 90s, which required extensive FDA review of clinical trial dossiers before shipping a drug overseas for a trial. Even if the receiving country’s regulators and Ethics Committee had approved the trial, the U.S. Exports Office could halt a shipment for safety reasons, which caused unforeseen delays and confusion. The verbiage surrounding the newly-proposed process gives little insight into the metrics and criteria the Agency would be using to review and authorize the import of drugs from foreign sources – without a rock-solid definition of “authorized by the Agency”, it’s difficult to envision this system would create an operationally reliable pathway to foreign drug commerce.
The Canadian drug market is markedly small, roughly 1/7 the size of the U.S. market. Even if one U.S. state were to begin importing drugs from Canada, that increased demand could significantly change the available Canadian inventory. Allowing multiple states could adversely affect the supply of prescription drugs in Canada and raise prescription drug costs for Canadians – leading to heightened public health concerns north of the border. If Canadian manufacturers are unwilling to do business with the U.S. due to shortages and supply, the theoretical savings will be limited and reduce any impact on pricing in the US.
These questions, among others, mean that any process to import products from Canada under the proposed rule and guidance would require buy-in from the Canadian government and the U.S. drug industry. Both groups are currently opposed to the proposition; Canada fears it won’t have enough supply to open its doors to the U.S., and the U.S. drug industry is publically opposed for quality reasons, however, is also privately loathes to negatively impact the pricing and margins in the massive U.S. drug market. It is very unclear how, if at all, the Trump administration would secure the cooperation of these two important stakeholders.
Furthermore, the proposed process for states to submit proposals to FDA to participate in the foreign import is so intricate and complex that expenditures related to resourcing and logistics could easily outweigh savings. The proposed rule states that importation proposals have to “demonstrate a significant cost reduction to the American consumer.” The devil is in the details here. What constitutes “significant”? Is that calculated for the American consumer who is a working professional with good health care and a disposable income, the a single mother living in the inner city on public insurance with very few choices for where and how she gets her care, the caretaker who is working a grueling job to send money back to his/her family outside the U.S., or the single father working two jobs to provide shelter and food? The definitions and processes here are vague and of significant importance.
Time is money in this industry, and the likelihood that added complexity leads to added spend is high. When manufacturers spend more, consumers spend more; the concern that savings will be limited is a real one.
Transparency and Trust
Tight control of supply chain and R&D process is a top concern of American consumers who want to know that what they’re putting in their bodies is safe and marketed accurately. Our domestic drug development process is already so elaborate and opaque that the typical American is uncertain about the role FDA plays in medicine. Any further obstruction to the consumer’s view into the drug development process, such as the added element of foreign commerce, spells bad news for public uptake. We cannot neglect the fact that CanaRx happened, proving that the U.S. can fall victim to fraudulent marketing and sales. When we open ourselves up to business with other countries, we also take on more process, accept more risk, and give up some control. This could, of course, happen domestically too, but from a public health perspective, less is more when it comes to risk, and we should be maximizing the trust the public has in the industry.
Operational details, access issues, and lack of trust are three notable hurdles in the path to lower drug prices – unfortunately, in my opinion, the proposed two-pronged policy does not address any of them. Hopefully, in the coming years, we’ll see leaders come up with new, alternative strategies for controlling the dollars spent on drug development and commerce from within the U.S. where the problem lies, rather than looking for solutions beyond our borders.