Seventeen years after Congress allowed federal importation and responding to laws enacted in several states to allow importation – the Trump Administration issued a proposed rule to implement the law. However, an analysis by the National Academy for State Health Policy (NASHP) finds that without certain revisions, the proposed rule would challenge states’ ability to implement and administer importation programs that ensure both safety and consumer savings.
Read NASHP’s recommended changes to the Administration’s proposed rule on the importation of prescription drugs here.
Section 804 of the US Federal Food, Drug, and Cosmetic Act, enacted in 2003, directs the secretary of the US Department of Health and Human Services (HHS) to issue regulations guiding the importation of certain prescription drugs from Canada. The HHS secretary must certify that importation poses no additional risk to the public’s health and safety and results in significant reduction in costs to American consumers. In December 2019, the Administration proposed regulations to implement this provision and recently HHS Secretary Alex Azar signaled an openness to include insulin as an importable drug, a move strongly supported by states.
The landmark rule establishes a pathway for state importation, but as proposed it imposes costly administrative burdens that would limit a state’s ability to import drugs at a time when effective action to lower drug prices is imperative. In the absence of federal action to curb drug prices, states have turned to importation as a means to lower costs. In developing their proposals, states recognize that the pharmaceutical industry is already a global one. An estimated 88 percent of active drug ingredients (APIs) sold in the United States and 63 percent of facilities making finished drugs sold domestically are located overseas. In 2018, over $70 billion worth of drug products were imported into the United States.
That global supply chain is already carefully regulated by the US Food and Drug Administration (FDA) and state importation programs, many of which used NASHP’s model importation law in their program design, are building on and mirroring those existing, federal safety requirements. According to the Kaiser Family Foundation, as many as 19 million Americans, frustrated by the high cost of prescription drugs, have imported a drug – sometimes through vehicles that evade current regulatory protections. States are proposing safe, wholesale importation of certain drugs, building on FDA’s current system, to provide a regulated channel for residents to access lower cost drugs to ensure FDA’s high safety standards are met.
The proposed rule clearly identifies the requirements for a state to propose a Section 804 Importation Program (SIP) for review and approval by the federal government. However, without certain revisions the proposed rule would impose administrative requirements that challenge a state’s capacity to establish and implement programs that ensure both safety and consumer savings.
Successful state implementation of importation requires certain revisions to the proposed rules, including:
States need the authority to determine which state agency will administer the program. The rule requires administration of the program by the state entity responsible for regulating pharmacies and wholesalers. Collaboration with those entities is necessary but those entities often lack the staff and capacity to administer an importation program, and such a requirement is inconsistent with most states’ Section 804 importation laws.
Requiring a state to have completed agreements with importers, foreign sellers, relabelers, and repackagers at the time of the state’s application to the federal government is unrealistic, given that those entities cannot enter into agreements until a program is authorized by the federal government. Instead, the federal government could conditionally approve SIPs, pending those agreements, and should provide technical assistance to states in developing them with Canada.
States need to contract with multiple foreign sellers in Canada to assure sufficient competition and supply of drugs under their programs. The proposed rule would initially limit states to one foreign seller.
Collaboration with Canada is a cornerstone of state importation plans and allowing drugs to be relabeled and repackaged in Canada would provide financial incentives for Canada to support the program, and would impose no additional public health and safety risks because the businesses that conduct relabeling and repackaging in Canada must already meet FDA standards.
Drug testing would be conducted in the United States even if repacking and relabeling are completed in Canada. In 2019, the FDA tested only 0.03 percent of all drug shipments imported into the United States. By law, these new drug importation programs will test and ensure the authenticity of 100 percent of drug shipments imported under these programs. But the rule’s restrictions on how that testing must be performed will raise costs without improving safety. The proposed rule, for example, requires all labs that test drugs to have an FDA inspection history, but does not provide information about how many currently do. The competency of drug testing labs could be ensured by requiring them to meet strict accreditation standards, and the FDA does not typically inspect independent labs. Under the proposed requirement, this rule could result in too few labs available to perform the necessary testing. As a result, states would be unable to implement their programs.
The proposed rule also limits state implementation capacity by mandating that all sampling, statutory testing, and relabeling of imported drugs occur within the confines of a foreign trade zone or port area. Under FDA’s current system for regulating drugs., these activities must meet FDA standards regardless of where they are conducted. This geographic limitation in the proposed rule poses a barrier to states’ implementation of their importation programs. There is no evidence that this limitation will ensure additional protection to public health and safety.
The proposed rule also relies on manufacturers to provide necessary disclosures and other important information. Manufacturers have historically expressed strong opposition to importation of their drugs and relying on them to provide critical information is expected to cause delays. The federal government should provide states with all necessary information in the event manufacturers resist timely compliance with these requirements.
The requirements for adverse event reporting and recalls as proposed by the proposed rule are redundant and costly. Current adverse event reporting and recall rules and procedures already protect consumers and should be followed.
The rule imposes various additional, unduly burdensome requirements. For example, the proposed rule requires the full suspension of a state’s importation program if any aspect of the state’s program does not meet an applicable standard. Instead, the rule should allow for corrective action plans in instances where noncompliance does not compromise consumer safety or protections. Further, the proposed rule includes a strict severability provision, which needs to be revised. In its current construction, the entire rule could be thrown out on a minor technicality.
By requiring the automatic termination of a SIP after two years, unless proactively extended by the FDA, the rule discourages investment and participation in a SIP.
Limiting the burden of pharmaceutical prices remains a priority that requires broader federal action. Until then, NASHP will work with states to continues addressing the issue and applauds the Administration’s effort to facilitate importation, but two hurdles remain.
First, without some modifications, the proposed rule creates costly barriers to state implementation that are unnecessary to ensure the safety of imported drugs and would increase state costs and reduce or even restrict states’ abilities to ensure savings to consumers.
More important, implementation of this initiative requires Canadian cooperation and the active engagement of the Trump administration to address any regulatory or legal barriers that Canada identifies that could impede the safe and cost-effective importation of certain drugs. Safe importation requires a partnership between the state and federal governments that has not yet been fully articulated.
https://www.nashp.org/wp-content/uploads/2019/01/rx-bill-calculator-shutterstock_10_15_2018.jpg37445616Melanie Felicianohttps://www.nashp.org/wp-content/uploads/2019/06/NASHP-Logo.pngMelanie Feliciano2020-03-09 17:46:262020-03-10 13:02:34NASHP Responds to Proposed, Landmark Federal Drug Importation Rule: Changes Needed