PharmacyChecker Blog

Helping Americans Get The Truth About Prescription Drug Savings
Published by:

At the beginning of the 21st century, what started out as a trickle of American seniors buying drugs in Canada in order to save money, turned into millions of Americans over the past decade buying their drugs from Canadian and other international pharmacies. At that time, the demand was largely due to the fact that Medicare did not include a drug benefit, and tens of millions of seniors had to pay entirely out-of-pocket for their prescriptions drugs. Not only has this industry helped millions of Americans afford prescription drugs and created public awareness about international drug price disparities, but it has affected U.S. healthcare policy, leading to greater health coverage.

Drug importation policy and politics over the last 10 years

The early groundswell of bi-partisan support for regulatory changes that would have made drug importation technically legal for Americans and U.S. pharmacies was instrumental in bringing about the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which created “Part D” of Medicare – a new drug benefit. Before the advent of Part D, stories about buying drugs from, and bus trips to, Canadian pharmacies were ubiquitous in mainstream media. Such reporting served to educate the public about drug price controls in other countries. Many Americans learned that most other countries, rich or otherwise, keep drug prices affordable, something the U.S. does not do. Americans, and particularly seniors, who need and use the most medication, became outraged to learn that the exact same drug was 50%, sometimes 90%, less expensive just across the border; they were even more upset to discover that it’s technically illegal to take advantage of those savings. The outrage among seniors, a group known to vote in great numbers, served to motivate many leaders to call for the legalization of personal drug importation but the result was passage of the MMA, creating the new drug benefit for seniors.

Part D plans, known also as Medicare drug plans, were first available in 2006. Despite the infamous “doughnut hole”, a coverage gap through which enrollees are required to pay thousands of dollars out-of-pocket, the plans greatly helped seniors afford their medications. The new healthcare law fills the hole over the coming decade and, in no small part due to the use of drug importation as a bargaining chip with the pharmaceutical industry.

Since 2000, many bills have been introduced to legalize drug importation, and some have passed in one chamber or the other. Often overlooked is the first bill, the Medicine Equity and Drug Safety (MEDS) Act of 2000 (See Sec 804 [21 USC] § 384), which Congress passed, and the president signed, to legalize drug importation from Canada and many other countries but only if the Secretary of Health and Human Services certified the safety of the practice. Since no Secretary of Health and Human Services has done so, drug importation remains illegal.

A bargaining chip with the pharmaceutical industry

The MEDS Act, and the subsequent introduction of new bills with similar goals to legalize drug importation, was viewed by the pharmaceutical industry as threatening to its long-term profitability, as personal and wholesale importation of prescription drugs would bring greater price competition – meaning lower prices – to the market. For this reason, politicians have used the possibility of legalizing drug importation as a bargaining chip with the pharmaceutical industry. But the chip would not be cashed in a major way until 2009.

While the MMA was a victory for seniors, it was as well for the pharmaceutical industry, as the law actually banned the U.S. from negotiating prices with drug companies to lower them dramatically across the board and actually narrowed the reach of MEDS to only allow for drug importation from Canada – if the Secretary of Health and Human Services certified the safety of the practice. Moreover, pharmaceutical companies could now look forward to the tens of millions of newly insured, which means more prescription drug sales.

The critical point here is that the resultant Medicare drug plans were created in large part as a response, mostly by seniors, to the call for legalizing drug importation. Once the drug plans were adopted by millions of seniors, their existence, to critics of personal drug importation, was used to argue that legalizing drug importation was no longer needed. The history, of course, shows that millions of seniors continued to struggle with their prescription drug bills even with the Medicare drug plans.

The issue of drug importation played a similar role in the passage of the recent healthcare law and this time was used as a major bargaining chip by the Obama administration. One of the key strategies of the Obama administration was to acquire and maintain the support of the pharmaceutical industry in passing healthcare legislation, believing that industry backing from at least one major player was needed for its passage. However, the Obama administration also wanted to close (or narrow) the Medicare doughnut hole and bring down drug prices for other government health programs.

Candidate Obama’s support for legalizing drug importation gave way to President Obama’s critical imperative of passing comprehensive healthcare reform. During debate on the healthcare legislation, Senators Byron Dorgan (D-ND), and Olympia Snowe (R-ME) introduced an amendment to legalize drug importation, including personal drug importation. Though the vote failed, 51 senators did vote in its favor (60 votes were needed). Mainstream media reported that the FDA, under the guidance of the Obama administration, came out against the Dorgan-Snowe Amendment as part of a “deal” with the pharmaceutical industry in which the government will neither negotiate drug prices with drug companies nor legalize drug importation in return for $80 billion in drug discounts and rebates for government programs, particularly to narrow the doughnut hole by 2020 to cover 25% of drug costs. Not coincidentally, the Congressional Budget Office estimated that legalizing drug importation, if the Dorgan-Snowe Amendment had passed, would have saved the U.S. taxpayer $80 billion.

In the manner described above, drug importation was used as a bargaining chip by the Obama administration for, arguably, the much greater victory of securing health insurance for tens of millions of Americans.

Personal drug importation’s future

As I write, about 46 million Americans are still uninsured, millions of Medicare enrollees face high out-of-pocket prescription costs, and still millions more struggle with prescription drug prices (See Drug Prices S.O.S). Unless the FDA stops them, Americans will continue to purchase drugs from Canada and other countries if they can’t afford them here at home. The last word from the White House, coming from senior Advisor to President Obama, David Axelrod, is that President Obama is still supportive of legalizing re-importation for prescription drugs, according to The battle for greater health coverage in America is marching in the right direction. Safe personal drug importation can and should continue to help uninsured and under-insured Americans afford their medication and hold accountable the pharmaceutical industry to keep their promise of providing $80 billion dollars in drug discounts over the next ten years.

Tagged with: , , , , , , , , , ,