The Utah State Capitol
Utah State Representative Norman Thurston (R-64) has introduced legislation that would allow pharmacy wholesalers in Utah to import lower-cost pharmaceuticals to be sold within state lines. The bill’s goal is to lower the growing burden of prescription drug costs on the Utah budget and reduce out-of-pocket costs for Utah residents. The legislation is largely based on model state drug importation legislation drafted by the National Academy for State Health Policy (NASHP).
The bill, H.B. 163, “The Canadian Prescription Drug Importation Act,” differs substantially from past state-based initiatives, legislation, and laws on prescription drug importation. The most pronounced difference is that it seeks formal approval from the federal government to import medication from Canada. Past state laws on drug importation sought to circumvent federal regulations, such as in Maine, where the law was overturned in 2015.
Due to the debate about whether to legalize importation from Canada, it is often assumed that importation is illegal under current law. Not so. Many if not most medications you buy in U.S. pharmacies are foreign-made. Those prescriptions are manufactured in FDA-registered establishments, located abroad and lawfully exported by the drug manufacturer to the U.S. In those cases, the drug company controls the distribution into the U.S. and, therefore, the price. Often, the same medications sold in the U.S. are also sold within Canada, but at much lower prices.
The Food, Drug and Cosmetic Act (FDCA) is the main federal statute regulating the manufacture, distribution, and sale of pharmaceutical drugs, which includes regulating imports. Section 804 of the FDCA, which is titled “Importation of Prescription Drugs,” makes importation of lower-cost medications from Canada expressly legal in wholesale and personal use quantities, but only if the Secretary of Health and Human Services affirms that there would be “no additional risk to the public’s health and safety” and would “result in a significant reduction in the cost of covered products to the American consumer.” To date, no HHS secretary has made such a certification.
If H.B. 163 passes, the Utah Department of Health will lead a study on the creation of a program that would meet the strictest requirements of the FDCA and enable the HHS secretary to certify its safety. Once approved, licensed Utah wholesale pharmacies will import medications from licensed wholesalers in Canada. Those Utah wholesale pharmacies could then sell medications to retail pharmacies at a discounted price off the regular U.S. average wholesale price, bringing savings to third-party payers and consumers.
The bill specifically requires that the importation program comply with the track and trace requirements of Title II of the Drug Security and Quality Act. Under this federal law, all companies in the U.S. drug supply chain, including manufacturers, wholesale pharmacies, retail pharmacies, and third-party logistics providers, must take certain actions so that a pharmaceutical product can be traced back electronically to the manufacturing source. The provisions of Title II will not be fully implemented until 2023.
The Utah Department of Health, under the provisions of the bill, would be required to create a list of drugs that could be imported and would yield significant savings. Drugs that could not be imported include controlled substances (such as Vicodin and Valium), biological products, infused or inhaled drugs.
Spending billions of dollars on lobbying, the pharmaceutical industry has been incredibly successful at defeating federal and state-based initiatives to lower drug prices, but the thoroughness of this Utah drug importation bill has us optimistic. The bill’s breakdown into three stages makes its passage more probable. Passage does not immediately lead to new importation of cheaper medication. It leads to a study and creation of the program. That’s step one. Step two is submitting it to the HHS secretary for review and hopefully consent to commence the program. Step three is starting the program in accordance with federal law, Section 804 of the FDCA.
There is a good chance that the Secretary of HHS, particularly if it is Alex Azar, will not consent to the program. However, the bill has what I’m calling a “don’t give up clause” in it. It states: “If the application for the prescription drug importation program is not approved by the secretary, the department shall submit a new application.” It provides for Utah to continue to try each year until 2023. If Azar or another secretary does not approve the program, he or she will need to provide justification as to why. The study envisioned in this bill will demonstrate that it is exceedingly safe to import lower-cost medication from Canada. Tens of millions of Americans have already imported medication to fill prescriptions due to cost, without reports of death or adverse reactions.
In referring to his state drug importation plans in an interview with NASHP, Rep. Thurston stated: “federal law already allows importation of drugs to happen… Most of it is logistics, how do we get them here, labelled correctly, and distributed to patients? It’s a logistics issue, not a philosophical one, and there are ways of addressing it.” A perfect articulation of the drug importation issue.
