The Food and Drug Administration’s decision to allow Florida to import some prescription drugs from Canada marks a major shift in U.S. drug policy, and could open the door to other states looking for ways to rein in high drug prices.
The approval was three years in the making and came only after Florida sued FDA for alleged inaction. The state estimates it would save about $150 million dollars in the first year of implementation, but the plan has a long way to go before those savings are ever realized.
Still, the approval gives a political victory to both President Biden and Florida Gov. Ron DeSantis, a Republican presidential candidate, both of whom have been prioritizing lowering drug prices.
“After years of federal bureaucrats dragging their feet, Florida will now be able to import low-cost, life-saving prescription drugs,” DeSantis said in a statement. “It’s about time that the FDA put patients over politics and the interests of Floridians over Big Pharma.”
The Biden administration has been touting pocketbook issues and highlighting ways it’s lowering health costs, such as capping insulin costs and letting Medicare negotiate some drug prices.
“For too long, Americans have been forced to pay the highest prescription drug prices of any developed nation in the world. President Biden believes this is unacceptable and is laser-focused on actions to cut the cost of medicine families need,” White House spokeswoman Kelly Scully said Friday.
“Today’s FDA action is a step in the right direction that can help other states apply for importation plans.”
Experts said the approval itself shows the government is looking seriously at trying to lower drug prices, and represents a significant departure from officials who in years past argued that drug importation is risky, potentially harmful to patients, or a “gimmick.”
The FDA said it was willing to work with any state or Indian tribe to design an importation plan.
FDA Commissioner Robert Califf in a statement said the proposals “must demonstrate the programs would result in significant cost savings to consumers without adding risk of exposure to unsafe or ineffective drugs.”
Supply chain experts, health analysts and others said there are significant hurdles to Florida’s import plan, and that drug importation isn’t the solution for high drug prices that politicians make it out to be.
“I think this being perceived as a panacea to lower drug costs in Florida and elsewhere is wishful thinking by politicians and will not materialize in the way that they have portrayed to the public,” said Chris Meekins, an analyst at Raymond James and a former Health and Human Services official during the Trump administration.
Congress first passed a law allowing wholesalers and pharmacists to import drugs from other countries in 2000, but it was amended to Canada only in 2003, along with other requirements.
Drug importation was a priority in the later days of the Trump administration, and in 2020 rules were issued allowing states to submit plans for approval. Florida was the first to apply. A 2021 executive order from Biden gave the policy new momentum and directed federal agencies to work with states on importation plans.
But FDA inaction led DeSantis to sue the agency, accusing it of “reckless delay” in approving the request.
Individuals are allowed to buy from Canadian pharmacies, but states have long sought to purchase cheaper drugs directly from Canadian wholesalers. Prescription drugs are cheaper in Canada, as in most other countries, because the government can directly negotiate the price with drug companies.
Genevieve Kanter, an associate professor of public policy at the USC Sol Price School of Public Policy, said the broad failure to let the federal government negotiate costs with drugmakers will keep prices high in the U.S.
“Medicare so far has been hamstrung from negotiating. That has changed a little bit with the Inflation Reduction Act, but that only covers a small number of drugs,” Kanter said.
The law’s price negotiation provisions are expected to save the federal government an estimated $98.5 billion over a decade.
Another hurdle is opposition from drugmakers and the Canadian government, both of which object to allowing wholesale prescription drugs over the border.
Canadian officials have expressed concern that their country just doesn’t have enough medicine to supply its own citizens and Florida’s.
“The Government of Canada is taking all necessary action to safeguard the drug supply and ensure Canadians have access to the prescription drugs they need and has been clear in its position: bulk importation will not provide an effective solution to the problem of high drug prices in the U.S,” Health Canada said in a statement.
Kevin Schulman, a professor of medicine at Stanford University, said Canadian officials are “going to be desperate to maintain the price that they’re being charged. And so they’re going to work with the pharmaceutical industry to keep the supply within Canada.”
“If the pharmaceutical industry responds,” he added, “then the Canadian government can have every incentive possible to stop this.”
There are more than 22 million people living in Florida, compared to about 39 million in Canada. In 2020, the Canadian government passed an order that prohibited the export of any drugs if those exports could cause or worsen a drug shortage.
Drug companies have also indicated they won’t allocate more supply to Canada just so the products can be exported to the U.S., meaning that Canadians would see shortages.
“Canadians have experienced significant drug shortages in recent years and any attempts to import drugs from Canada could further exacerbate our already fragile drug supply,” the Canadian Pharmacists Association said in a statement.
The industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) and two other groups sued the Trump administration in 2020 over the importation effort, but the lawsuit was dismissed by a federal judge last year.
The group is likely to sue again, but Meekins said the industry has options to effectively block the plan from being implemented even without the courts.
“[Importation] has been a topic of conversation for a couple of decades now. The pharmaceutical companies have understood there was this risk that a policymaker could move in this direction … so the companies have tools in their toolbox to limit the potential impact even if a court allows this to go forward,” Meekins said.
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