A year after calling proposals allowing Americans to import cheaper drugs from Canada a “gimmick,” Health and Human Services Secretary Alex Azar said the federal government is “open for business” on such a strategy.
Azar announced a preliminary plan Wednesday to allow Americans to import certain lower-cost drugs from Canada. Insulin, biological drugs, controlled substances and intravenous drugs would not be included.
The plan relies on states to come up with proposals for safe importation and submit them for federal approval.
Under a second option, manufacturers could import versions of any FDA-approved drugs from foreign countries — including insulin — and sell them at a lower cost than the same U.S. versions. This appears to be a way drugmakers could avoid some of the contracts they have with drug middlemen, known as pharmacy benefit managers.
“The administration has reason to believe that manufacturers might use this pathway as an opportunity to offer Americans lower cost versions of their own drugs,” according to the plan announced Wednesday. “In recent years, multiple manufacturers have stated (either publicly or in statements to the administration) that they wanted to offer lower cost versions but could not readily do so because they were locked into contracts with other parties in the supply chain.”
The announcement marked the latest shift by the Trump administration on the decades-old debate about formally allowing Americans to buy drugs from Canada, where prices are significantly lower.
Drugmakers were quick to criticize the plan. Stephen J. Ubl, president and CEO of the brand-name drug trade group, the Pharmaceutical Research and Manufacturers of America, called the 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,” he said in a statement. “Drugs coming through Canada could have originated from anywhere in the world and may not have undergone stringent review by the FDA.”
But Sen. Lamar Alexander (R-Tenn.), chairman of the Health, Education, Labor and Pensions Committee, said he welcomed the administration’s move to reduce costs. “The key for me is whether this plan preserves the Food and Drug Administration’s gold standard for safety and effectiveness,” he said in a statement.
The same medicines are often cheaper in other countries than in the U.S. since most developed countries negotiate with drugmakers to set prices. But opponents of importation say sending drugs over the border will increase the chances Americans get counterfeit medications, a claim often boosted by the drug industry.
As drug prices have soared here, Americans are more open to buying drugs from Canada. Some have for decades been driving over the border; others use online pharmacies or place orders at storefronts that connect buyers to pharmacies in Canada and other countries.
Although these strategies are technically illegal, the government does not prosecute individual offenders. Nor has it moved to stop the dozens of cities, counties and school districts across the United States that have programs for employees to buy drugs from Canada and elsewhere.
The administration is offering “a real plan for America to benefit from prescription drug importation, but the proof is in the follow-through,” said Gabriel Levitt, the co-founder of PharmacyChecker.com, a private company that verifies international online pharmacies and compares prescription drug prices for consumers. He said, given Azar’s support, he thinks the plan “has a good chance.”
While Families USA Executive Director Frederick Isasi praised the announcement, he cautioned it’s not a major fix for high U.S. drug prices.
“This is a tactic not a policy solution,” he said. “We should not fool ourselves into thinking that relying on Canada’s ability to regulate drug prices is a comprehensive or long-term solution for the United States. Most importantly, it also does not solve the egregious problem of pharmaceutical price abuses in America.”
In May 2018, Azar said the prospect of importing drugs from Canada was just a “gimmick” because that country is not large enough to meet all the drug needs of the United States.
But lowering drug prices has been a key promise of President Donald Trump, and a few months later, Azar said he was forming a work group that would explore allowing certain drugs that had seen major price hikes to be imported.
The idea got a boost this spring when Trump offered his support, marking the first time drug importation has won a presidential endorsement.
The 2003 Medicare Modernization Act allows states to import cheaper drugs from Canada, but only if the HHS secretary verifies their safety. Previous attempts by states to allow importation failed because the secretary opposed them.
Azar, a former top executive at the drugmaker Eli Lilly, said Wednesday that the federal government has changed its “mindset” on the issue. In the past few years, “the landscape and opportunities for safe linkages of the drug supply chain have changed, and that is why we are open to importation,” he added.
He acknowledged that HHS and the Food and Drug Administration have consistently said there was no way importing drugs from Canada could be done without putting patients at risk for counterfeit drugs.
“Today we are saying we are open and there is a pathway and we are laying out criteria for states, wholesale drug distributors and pharmacies to convince us they have a plan that protects the integrity of the drug supply chain.”
Canadian health officials have expressed concerns about U.S. importation, Azar said, but he added that it is up to states that want to start a program to work to overcome the obstacles, such as a lack of supply, Canadians foresee.
“That is for them to work out, and there are hurdles, but we think those hurdles are surmountable and this can be done,” Azar said. “We are open-minded. We are open for business.”
Three states — Colorado, Florida and Vermont — have approved legislation to import drugs and are working on proposals.
Vermont, which passed legislation to start planning the program a year ago, is still trying to find a way to ensure the safety of imported drugs and so far has identified only 17 medicines that would save enough money to be worth bringing over the border. Those drugs include treatments for conditions including diabetes, hepatitis C, cancer and HIV/AIDS.
Florida Gov. Ron DeSantis tweeted his thanks to the president “for supporting my efforts to lower prescription drug costs for Floridians. You are helping Florida lead the way to make safe and affordable prescription drugs a reality.”
Trish Riley, executive director of the National Academy for State Health Policy, which is working with states on their importation plans, said the plan to have states set up programs could take years to set up because of the slow federal rule-making process.
Azar did not offer any timeframe on when a system to import drugs from Canada could be in place in any states.
Update: This story was updated on July 31 at 5:20 p.m. ET to add some reactions to the administration’s announcement. It also makes clear that some drugs are treated differently under separate scenarios laid out in the proposal.