Six states with laws enabling the importation of prescription drugs from Canada – Vermont, Florida, Maine, Colorado, New Mexico, and New Hampshire – are awaiting publication of federal rules currently under review by the Office of Management and Budget.
They are eager to see if the final rules address key concerns submitted by the National Academy for State Health Policy (NASHP) in late March on the proposed rule, published in December 2019. In order to enable effective implementation of the program, states raised several concerns and requested changes, including:
- Giving states the flexibility to determine the most appropriate state agency in which to house a state importation program (SIP);
- Removal of the requirement that states must execute contracts with program partners prior to obtaining federal approval for a SIP; and
- An extension of the initial SIP program terms beyond two years.
In order to capture the savings promised by importation of drugs from Canada – where prices on commonly used drugs can be up to 80 percent lower than in the United States – states are requesting changes to ensure those savings can be passed to consumers. State officials fear the savings could be “absorbed” by several proposed requirements that experts contend are not necessary to maintain program safety – but appear certain to eat into savings that states are hoping to pass on to consumers.
For example, states are requesting removal of the requirement that all sampling, testing, and relabeling of imported drugs occur within the confines of a foreign trade zone or port – a geographic restriction that could prove costly to states without providing any additional safety.
Other changes states requested include permitting drugs to be re-labeled and repackaged in Canada – a change that would also provide a welcome financial incentive for Canada to support importation given that it has otherwise expressed reluctance to do so. Finally, in order to ensure a competitive marketplace, states requested authority to contract with multiple foreign sellers rather than just one – the current limit in the proposed rule.
While Vermont, Colorado, Maine, and Florida have submitted applications for federal approval for their SIPs according to timelines laid out in their state’s statutes, only Florida has issued an “Invitation to Negotiate” to begin the process of contracting with a vendor for a $30 million, three-year contract to manage its SIP. That contract is scheduled to be awarded in December 2020.
Florida’s SIP program design contains some important differences compared to other states’ proposed importation programs. While most states have determined that savings for consumers are likely to be greatest in the commercial sector and have designed their SIPs accordingly, Florida chose to limit its initial SIP to only public payers, such as Medicaid and its Department of Corrections, which already receive significant discounts and don’t require significant, if any, out-of-pocket spending by individuals. Though Florida’s application includes estimated savings of $150 million from its SIP, it did not include details describing how those savings would translate into consumer savings, which is a requirement for federal approval alongside a demonstration of safety.
Because the Trump Administration has promised quick action on importation along with other drug pricing initiatives, it is widely expected that rules will be finalized before the December timeline reflected in the Federal Register. States are eager to see if the final rules will reflect the states’ much-needed changes critical to allowing states to safely import drugs from Canada while delivering on the promise of cost-savings to consumers.