Here We Go Again on 'Re-Importation'

Pharmaceutical CommercePharmaceutical Commerce - January/February 2009

Bipartisan group of senators sponsor a revived drug-importation bill

It is not exactly a bolt out of the blue that certain US Congress members are pushing for a method to allow the importation of drugs from price-controlled countries abroad; the effort was made last year, and in preceding Congressional sessions. But it is surprising—and dismaying—that the same old arguments are trotted out, as if all the complexities of pharmaceutical distribution brought to light during the pedigree wars of the past couple years didn’t exist. “Pedigree”—the set of regulations in force in some states, requiring a paper trail to follow drug shipments through the supply chain from manufacturer to dispenser—gets a bit of a boost, with the ironic outcome that if the new bill becomes law, we may have better tracking of drug movements outside the US than inside it.

But that outcome presupposes a lot of dubious events. The new bill, S.525, “The Pharmaceutical Market Access and Drug Safety Act,” was introduced by Sens. Byron Dorgan (D-ND), Olympia Snowe (R-ME), John McCain (R-AZ) and Debbie Stabenow (D-MI) on March 4. It has 24 cosponsors, and the accompanying news release notes that then Sen. Barack Obama was a cosponsor of an earlier bill (S.242), and that the 2010 White House budget proposal “supports . . . new efforts” for importation.

The bill authorizes the importation of drugs from Canada, Europe, Australia, New Zealand and Japan, whether by direct purchase or through Internet sales. The news release cites estimates from 2005 Congressional Budget Office (CBO) analysis that such importation would save the federal government $6.1 billion in drug outlays, part of around $50 billion for all Americans over the 2006-2015 period. Unlike previous bills, which depended on a certification by FDA and HHS as to exporters’ safety, it mandates FDA inspections of foreign factories (and pharmacies) and sidesteps the certification, which Dorgan’s office calls “merely a poison pill that is designed to be a roadblock to giving Americans access to more affordable prescription drugs.”

An agency (probably FTC) would monitor trade practices to ensure that pharma manufacturers are allowing the unencumbered distribution of drugs into a foreign country (so that they can then be exported to here), and FDA would monitor the drug characteristics to prevent cosmetic packaging changes from restricting US access.

Get real

There is a lot of comparable huffing and puffing in the legislation. However, if the same CBO analysis that Dorgan cites is given credence, when all is said and done, US drug prices would be shaved by 1%. And This Bill That Will Not Die overlooks more recent trends:

  • That US drug prices have risen by only 1-2% in last year and for this year, according to IMS Health estimates, and also that for all the attention paid to pharmaceutical costs, they represent only 11% of overall healthcare costs (and thus, a 1% savings in drug costs becomes a 0.1% savings in healthcare—not completely insignificant, but not a new day in healthcare either)
  • That even now, with cross-border deliveries of pharmaceuticals for individual use being informally permitted by default, the popularity of these transactions has declined following the implementation of Medicare Part D
  • That FDA still hasn’t gotten up to speed on inspections of foreign drug manufacturers (and we’ll pretend that the Chinese, Indian and Costa Rican manufacturing plants do not ship into Canada or elsewhere)
  • That the heparin scandal of last year, featuring contaminated product that killed dialysis and other patients, was an unintentional anomaly
  • And, best of all, that Canadian Internet pharmacies are actually in Canada, and that FDA will be able to find them.

There are a lot of other interesting elements to this legislation: that FDA would now pre-empt states in inspecting US pharmacies; and that anti-counterfeiting technologies would be applied and would be effective deterrents through multiple regulatory jurisdictions; and that FDA will have a ready-made system to track drug shipments around the world.

Although this bill has 24 cosponsors, a comparable number did so in the previous Congress and that didn’t get the bill to the President’s desk. For now, there is an enormous snarl building in overall healthcare legislation, and the irony of some Congress members pushing for “buy American” legislation while others, in this case, are pushing for a “buy non-American” action at the same time cannot be lost during the current economic implosion. But the pharma industry will have its work cut out for it in forestalling this toxic legislation.

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