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News

States Move Ahead With Canada Drug Importation While Awaiting Signal From Biden

Florida, Colorado and several New England states are moving ahead with efforts to import prescription drugs from Canada, a politically popular strategy greenlighted last year by President Donald Trump.

This story also ran on Fortune. It can be republished for free.

But it’s unclear whether the Biden administration will proceed with Trump’s plan for states and the federal government to help Americans obtain lower-priced medications from Canada.

During the presidential campaign, Joe Biden expressed support for the concept, strongly opposed by the American pharmaceutical industry. Drugmakers argue it would undercut efforts to keep their medicines safe.

The Pharmaceutical Research and Manufacturers of America, an industry trade group, filed suit in federal court in Washington, D.C., to stop the drug-purchasing initiatives in November. That followed the Trump administration’s final rule, issued in September, that cleared the way for states to seek federal approval for their importation programs.

Friday is the deadline for the government to respond to the suit, which could give the Biden administration a first opportunity to show where it stands on the issue. But the administration could also seek an extension from the court.

Meanwhile, Florida and Colorado are moving to outsource their drug importation plans to private companies.

Florida hired LifeScience Logistics, which stores prescription drugs in warehouses in Maryland, Texas and Indiana. The state is paying the Dallas company as much as $39 million over 2½ years, according to the contract. That does not include the price of the drugs Florida is buying.

LifeScience officials declined to comment.

Florida’s agreement with LifeScience came last fall, just weeks after the state received no bids on a $30 million contract for the job.

Florida’s importation plan calls initially for the purchase of drugs for state agencies, including the Medicaid program and the corrections and health departments. Officials say the plan could save the state in its first year between $80 million and $150 million. Florida’s Medicaid budget exceeds $28 billion, with the federal government picking up about 62% of the cost.

On Monday, the Colorado Department of Health Care Policy and Financing issued a request for companies to bid on its plan to import drugs from Canada. Unlike Florida’s plan, Colorado’s would help individuals buy the medicines at their local pharmacy. Colorado also would give health insurance plans the option to include imported drugs in their benefit designs.

Kim Bimestefer, executive director of Colorado’s Health Care Policy and Financing agency, said she is hopeful the Biden administration will allow importation plans to proceed. “We are optimistic,” she said.

Her agency’s analysis shows Colorado consumers can save an average of 61% off the price of many medications imported from Canada, she added.

Prices are cheaper north of the border because Canada limits how much drugmakers can charge for medicines. The United States lets the free market determine drug prices.

The Canadian government has said it would not allow the exportation of prescription drugs that would create or exacerbate a drug shortage. Bimestefer said that her agency has spoken to officials at the Canadian consulate in Denver and that officials there are mainly concerned about shortages of generic drugs rather than brand-name drugs, which is what her state is most interested in importing since they are among the most costly medicines in the U.S.

Colorado plans to choose a private company in Canada to export medications as well as a U.S. importer. It hopes to have a program in operation by mid-2022.

Other states working on importation are Vermont, New Hampshire and Maine.

But skeptics say getting the programs off the ground is a long shot. They note Congress in 2003 passed a law to allow certain drugs to be imported from Canada — but only if the secretary of the Department of Health and Human Services agreed it could be done safely. HHS secretaries under Presidents George W. Bush and Barack Obama refused to do that. But HHS Secretary Alex Azar gave the approval in September.

Biden’s HHS nominee, Xavier Becerra, voted for the 2003 Canadian drug importation law when he was a member of Congress.

HHS referred questions on the issue to the White House, which did not return calls for comment.

Trish Riley, executive director of the National Academy for State Health Policy, said states have worked hard to set up procedures to ensure drugs coming from Canada are as safe as those typically sold at local pharmacies. She noted that many drugs sold in the United States are already made overseas.

She said the Biden administration could choose not to defend the importation rule in the PhRMA court case or ask for an extension to reply to the lawsuit. “Right now, it’s murky,” she said of figuring out what the Biden team will do.

Ian Spatz, a senior adviser with consulting firm Manatt Health, questions how significant the savings could be under the plan, largely because of the hefty cost of setting up a program and running it over the objections of the pharmaceutical industry.

Another obstacle is that some of the highest-priced drugs, such as insulin and other injectables, are excluded from drug importation. Spatz also doubts whether ongoing safety issues can be resolved to satisfy the new administration.

“The Trump administration plan was merely to consider applications from states and that it was open for business,” he said. “Whether [HHS] will approve any applications in the current environment is highly uncertain.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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