On May 28, 2021, the U.S. Department of Health and Human Services (HHS) filed a motion urging a District Court to dismiss the Pharmaceutical Research & Manufacturers of America’s (PhRMA) challenge to a federal rule enabling state importation from Canada. The filing signaled the Biden administration’s commitment to defend the rule, which was published in October 2020 under the previous administration. HHS argued that PhRMA lacked standing to pursue the suit because manufacturers have not been harmed by the rule, and that PhRMA acted prematurely because no state importation program has been federally authorized yet.
The rule establishes the rigorous regulatory requirements that states must fulfill in order to create safe, cost-savings programs – the two core requirements for the federal authorization states must receive before implementing an importation program. During the rulemaking process, the National Academy for State Health Policy submitted comments that are drawn from our work with states to explain the changes needed to help enable successful implementation by states. Though some of the issues raised were not addressed in the final rule, states have proceeded to design programs within the confines of those rules. The action by the Biden administration to defend the rule, if successful, opens the door to negotiations with states about how best to proceed.
Six states have enacted laws enabling them to design Canadian importation program and to pursue federal authorization:
- Two states – Florida and New Mexico – have submitted formal importation program applications following publication of the final rule.
- Three states – Vermont, Colorado, and Maine – filed initial concept applications prior to the publication of the rule, in order to meet deadlines in their state statutes.
- New Hampshire passed enabling legislation, but has not yet submitted an application to HHS.
Florida, whose program design is unique in being limited to public payers, has already contracted with a vendor to run its program, and on Friday Governor DeSantis also announced a new agreement with a Canadian drug supplier. Colorado has also invested resources in advancing its program. In January Colorado issued an invitation to negotiate for a vendor (or vendors) to implement its program. Bidding closed in late April and the state is currently reviewing bids. Colorado’s program, similar to the other states with the exception of Florida, is focused on the commercial market as a strategy to ensure savings to consumers.
In addition to the six states implementing programs, 16 states also considered 23 drug importation bills this session. Some states are also exploring a new, related strategy to establish international reference rates based on Canadian pricing which would essentially allow a state to import Canadian prices in lieu of importing the drugs themselves. Seven states (PA, OK, ND, ME, HI, RI, NC) have introduced international reference rate bills to date based on the NASHP’s model legislation.