These are unique times we’re living in, so before I criticize this guy for his Big Pharma love, I feel compelled to hand him a well-earned compliment: Senator Richard Burr (R-NC) acted heroically in voting to impeach former President Trump in the wake of the violent January 6th assault on Congress. Whether or not you agree with Burr’s vote, history shows politicians rarely cross the aisle to impeach someone in their own party. Senator Burr’s vote was courageous. I stand by that even though he decided not to run for re-election in 2022.
People (like me) often accuse politicians of carrying water for Big Pharma so that they will receive large campaign contributions from the industry. During Sen. Burr’s last campaign in 2016, he received over $200,000 in campaign contributions from drug companies. These contributions contributed to him receiving an F grade on drug prices on the Prescription Justice Congressional Report Card. Even though he is not facing an election in 2022, Sen. Burr continues to espouse public policy beliefs and talking points of the multinational pharmaceutical industry. So maybe he is genuinely a believer in the pharmaceutical industry being able to charge anything it wants for life-saving medications because that’s the business model supposedly supporting wonderful advances in biomedical research. Maybe.
This week, I’m proud to announce that I teamed up with Stephen Salant, PhD, professor emeritus of economics at the University of Michigan, to write an op-ed called “The one-two punch to knock out high drug prices.” Professor Salant was also an economist with the Federal Reserve Board and the Rand Corporation. Our article, published today in The Hill, recommends legislation and regulatory reforms that would promote safe prescription drug importation and implement a most favored nation system of drug pricing for Medicare. The recommendations are based on executive orders from the Trump administration and Democratic legislation from the previous Congress. They should have intense bipartisan support.
Lots of others have written articles advocating similar reforms, but our article employs new economic theory articulated by Dr. Salant in a paper called Arbitrage Deterrence: A Theory of International Drug Pricing. You can read the op-ed and the paper (if you have strong math skills) but the gist is that: 1) Promoting drug importation, both personal and wholesale would lead to lower domestic but higher foreign drug prices, 2) Simultaneously implementing a strong system for international reference pricing would curtail the aforementioned drug price increases and create a noble cycle of lower and reasonable foreign and domestic prices, and 3) the savings to the U.S. government would be more than enough to subsidize biopharmaceutical research to offset lower R&D investments from drug companies.
With lies and deception, Big Pharma has used the threat posed by rogue websites and counterfeit drugs to push back against U.S. state legislation to gain access to lower drug prices in Canada. Regardless, several states have passed laws toward creating importation programs: Colorado, Florida, Maine, New Hampshire, New Mexico, and Vermont. Simple summary: Canada’s brand drugs are priced much lower and states want access to them. These state laws have largely been confined to wholesale drug importation. That is, until this week when California Assemblymember Sydney Kamlager introduced the Affordable Prescription Drug Importation Act, AB 458. The bill not only calls for wholesale importation from Canada – but also personal drug importation from Canada and other countries, subject to Section 804 of the Food, Drug, and Cosmetic Act. It’s about time!
The bill states:
“This bill would authorize an individual to import a prescription drug only for use by that individual or a member of that individual’s immediate family from a foreign pharmacy if specified requirements are met. The bill would prohibit an individual from, among other things, importing a prescription drug for resale or a controlled substance.”
This is a huge step in the right direction because Americans are already buying medications internationally. Millions have done so from safe international online pharmacies – and the law technically permits this through enforcement discretion, but they should have “express permission.” As I stated in a press release yesterday:
The Rand Corporation has released an impressive study showing that brand name drugs cost far more in the United States than in other countries – on average 344% more. For those of you looking for a methodologically strong analysis of international drug prices and a history of related studies, this is the report for you. In looking at all drugs, brand and generic, the percentage goes down to 256%. That’s because, as the report shows, generic drugs in the U.S. were found to be priced at 86% of those in other countries. The report was based on drug prices from 2018.
The report’s title is very descriptive of its contents: “International Prescription Drug Price Comparisons: Current Empirical Estimates and Comparisons with Previous Studies”
Explaining the report’s approach in the simplest terms: it accomplishes its main objectives by creating price indices for 32 member countries of the Organisation for Economic Cooperation and Development (OECD) and comparing them for all drugs, brand name and generic. That’s the report’s main focus. It has additional results for other categories, notably biologic drugs and the top 60 drugs in terms of sales. For biologics, which are generally the most expensive prescription products, U.S. prices are on average 295% the international price. For the top 60 drugs by sales, U.S prices are on average 394% higher.
This week, the Colorado Department of Health Care Policy and Financing issued a request for proposals, called an Invitation to Negotiate, to operate a state wholesale drug importation program as permitted under federal law and the administrative final rule issued by HHS last year, referred to as the Section 804 rule. Colorado’s proposal request is chock full of details, with many regulatory and legal issues addressed, quite ably predicting pushback from drug companies who virulently oppose importation. Notably, it addresses the Canadian government’s valid concerns about new drug importation channels from the United States aggravating Canadian drug shortages.
Last year, just before the Section 804 rule went into effect, the Canadian government issued an interim order mandating that Canadian wholesale pharmacies not export drugs that could create or exacerbate domestic drug shortages. Certain drugs will require proper supply reporting before approved for export. The pharmaceutical industry’s flawed and, in some cases, false arguments against importation invoking drug safety issues are not working to stop the momentum on Section 804 state programs. In the industry’s public relations and lobbying efforts against the program, they often highlight Canada’s understandable and protective response. That won’t work either.
Colorado’s RFP is clear in its obligation to not cause drug shortages in Canada. A full quote from the proposal is in order here:
Drug importation, by which I mean the process of buying much less expensive and equally safe prescription drugs from other countries, may see more sunlight under the Biden administration. For many drugs, the prices are frequently 90% less in other countries. Biden included drug importation among several policies he plans to pursue to lower drug prices. There’s momentum on drug importation from the Trump administration in the form of: