By Aaron McKeon-Fish, Partner
In the government’s ongoing pursuit of lower drug prices for American patients, the FDA’s Drug Importation Program, approved in Florida in January, allows states to import prescription drugs from Canada, where prices can be meaningfully lower. As the first of its kind, its implementation has already driven interest among eight other states, potentially reshaping the landscape of pharmaceutical pricing and access nationwide. But while its goal is to make drugs more affordable for patients and reduce overall drug expenditure, the program is fraught with significant challenges regarding implementation and scale, likely resulting in limited impact.
Pushback from pharmaceutical industry, academia policymakers and the Canadian government has been considerable. Organizations like PhRMA have sued to block the program, calling it “reckless” and citing concerns about patient safety and the integrity of the drug supply chain. Logistical hurdles such as incompatibility with the U.S. track and trace system, which tracks drugs from development throughout the supply chain to ensure safety, and the risk of counterfeit drugs infiltrating the supply chain, further complicate matters. Additionally, the program’s scope is also limited by its focus on specific drug categories and patient populations. For instance, only select prostate cancer, HIV, and mental health therapies have been approved for importation. Biologics, the most costly type of drug, are excluded from the program.
Operational barriers are another significant hurdle. States must adhere to strict protocols such as rigorous product testing for authenticity, obtaining FDA approval for each drug they seek to import and developing the infrastructure required for distribution (where some manufacturers have agreements with Canadian wholesalers not to export their drugs). Lastly, the program is narrowed to only select patient populations with chronic conditions, with about 5 million of 22 million Florida residents being eligible. This highly limits the cost savings potential, with the Congressional Budget Office concluding that this type of program would only reduce total drug spending by about 1% over a decade.
As manufacturers, policymakers and stakeholders navigate the complexities of healthcare reform, it’s essential to recognize that it’s a highly complex issue in a fragmented system. While initiatives like Florida’s Drug Importation Program may offer limited relief to patients in the short term, a comprehensive and sustainable approach to addressing drug pricing requires careful consideration of all stakeholders’ interests and the intricacies of the pharmaceutical supply chain. Looking ahead, the future of the Drug Importation Program remains uncertain. Operational barriers, scope limitations, and the small degree of drug price reduction suggest that the program’s influence on pricing pressure will be modest at best.
Arianna Noya contributed to this article.
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