FDA and the Importation of Prescription Drugs

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Scholars evaluate a recent FDA rule that creates an importation program for Canadian prescription drugs.

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For over 100 years, the U.S. Food and Drug Administration (FDA) has defined itself through reliance on scientific evidence over political rhetoric. As a result of this posture, FDA approval usually signals that a new product is safe and reliable. Lack of approval reminds consumers that a product has not received the same rigorous testing as approved drugs and devices.

At the same time, FDA-approved drugs in the United States cost far more than drugs in other countries, and domestic supplies of drugs are vulnerable to shortages and emergencies, such as disruptions caused by the global COVID-19 pandemic. So why not import cheaper versions of otherwise approved drugs?

According to a working paper released by the Council on Foreign Relations, federal law leaves FDA with very few options for approving and increasing importation of drugs. The report’s authors—Thomas J. Bollyky of the Council and Aaron S. Kesselheim of Harvard Medical Schoolargue that a recent FDA rule to encourage importation from Canada will fail to reduce drug prices or increase the volume of imported drugs.

The rule creates a program through which states and wholesalers can request permission to import prescription drugs from Canada under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA). This rule marks the first time that FDA has attempted to allow importation programs under the MMA since its passage in 2003. But in Bollyky and Kesselheim’s view, the rule will not achieve its goals of reducing costs and increasing importation of prescription drugs.

The authors criticize FDA’s new rule because it attaches a host of procedural costs for applicants that defeat the stated goal of reducing costs for consumers. For example, the MMA requires the HHS secretary to certify that importation will result in savings for consumers, but the rule shifts the burden of certification onto applicants through post-importation disclosures. The complexity of the application process may ultimately destroy any benefit to consumers, creating uncertainty for applicants before they can even begin to import drugs and show consumer savings.

Furthermore, Bollyky and Kesselheim express concern over the effect of the importation program on Canadian cooperation in cross-border initiatives. They argue that, if applicants receive FDA authorization, greater demand for Canadian drugs in the United States may encourage Canadian manufacturers and sellers to raise their prices overall, which would in turn reduce Canada’s incentives to facilitate the program’s success.

Bollyky and Kesselheim recognize that creating an importation program under the MMA is one of only a handful of ways that FDA could approve importation of prescription drugs. They identify three legal avenues for importing drugs: Discretionary FDA approval of individual patients importing drugs for personal use; temporary importation of drugs to respond to emergencies and shortages; and importation from Canada under the MMA.

Bollyky and Kesselheim describe the first two pathways as narrow and temporary. The exception for individual patients requires the patient to have a condition with no domestic treatment and limits importation to a three-month supply. When responding to emergencies and shortages through the second pathway, FDA prioritizes essential products and can only allow importation for the duration of the event.

Therefore, FDA chose its only remaining option to create a larger scale and longer-lasting drug importation program.

According to Bollyky and Kesselheim, this limited range of options results from the statutory framework governing FDA approval. The Food, Drug, and Cosmetic Act of 1938 sets out strict requirements for new drug applications, and FDA approval in turn relies on the information that manufacturers provide in applications, including the manufacturer’s location, packaging, and labeling. The Prescription Drug Marketing Act also prohibits non-manufacturers from importing prescription drugs, so even drugs made in the United States, approved by the FDA, and exported cannot be “re-imported” by wholesalers or other manufacturers.

Drug importation usually occurs after a regulator makes an equivalence determination that a foreign regulator satisfies domestic standards. Equivalence determinations can be formal, such as mutual recognition agreements, or informal, such as exercising discretion to allow importation from a particular place. Bollyky and Kesselheim point out that FDA has made few equivalence determinations throughout its history, and that statutes allow FDA discretion only over individual patients and emergencies.

Beyond the letter of the law, several HHS secretaries have repeatedly declined to design importation programs from Canada under the MMA. As former Secretary Robert Califf commented in 2015, “drugs from foreign sources that are not FDA-approved nor have such an inspection do not have the assurance of safety, effectiveness, and quality as drugs subject to FDA oversight.”

This view that FDA processes are the “gold standard” for health regulators forms a double-edged sword: It helped maintain FDA’s authority and reputation, but it contributed to the nearly 20-year delay in implementing the MMA’s pathway to an importation program.

President Donald J. Trump signed four executive orders in July aimed at lowering drug cost, and the White House claims that prescription drug prices have fallen during the Trump Administration. One of the orders directed current Secretary of Health and Human Services Alex Azar to finish the rulemaking process for creating the importation program as well as exercise FDA’s limited discretion in granting individual exceptions.

FDA’s final rule takes effect on November 30, and FDA will publish further guidance for applicants at a later date.