DRUG REIMPORTATION: Costs, Tradeoffs, and Implications
...f Health and Human Services (HHS) to develop a regulatory framework that would allow the reimportation of FDA-approved drugs made in the U.S. and abroad, under certain circumstances. On July 24, 2003 the House passed the Pharmaceutical Market Access Act (H.R. 2427) by a vote of 243-186. This was the official House position on drug reimportation in the House-Senate Medicare Conference Committee. Early this summer, the Senate voted 62-28 to attach a different reimportation proposal to pending Medicare legislation. The Senate bill was more limited in scope, allowing U.S. pharmacists to buy prescription drugs in Canada and resell them in the U.S. However, the Senate bill required that the Secretary of HHS certify that reimportation can be done safely, a measure not required in the House bill. This provision has proven to be the “poison pill” for similar legislation in the past because former HHS Secretary Donna Shalala would not certify that reimportation could be done safely. Furthermore, current HHS Secretary Tommy Thompson has indicated that he would also be unable to certify the policy, effectively rendering the Senate bill moot. The recent Medicare compromise that came out of the Conference Committee includes the Senate version of the drug reimportation provision. The Senate gave final congressional approval to the Medicare legislation on November 24, 2003 by a 54-44 vote. The bill will now be sent to the President to be signed into law. Many state officials are exploring ways to effectuate drug reimportation policies for their respective states, and in doing so, bypass Congress. Illinois Governor Rod Blagojevic commissioned a study to examine the financial impacts of reimporting drugs from Canada, while Minnesota Governor Tim Pawlenty has proposed establishing a website for his state’s residents that would facilitate pharmaceutical reimportation. Officials in many other states are considering similar steps in an effort to satisfy constituents who are upset at the high costs of prescription drugs, and see reimportation as a quick solution (3). Our proposal is a hybrid model of the House and Senate versions of the drug reimportation policies. Like the Senate bill, drug reimportation would be allowed from FDA approved facilities in Canada only, where the drug safety regimen is most analogous to the FDA framework in the United States. This would ease the concerns of some opponents regarding the reliability of regulatory standards in other countries and, ultimately, the safety and efficacy of reimported drugs. Like the House version, we would not require the Secretary of HHS to certify the safety of reimported drugs, but rather would charge the Secretary with developing a regulatory framework that would allay the public concern over adulterated, misbranded, or unsafe medications. This is an important aspect of the policy, as it would allow a meaningful and measurable control over drug reimportation, as opposed to the current position, which provides a constructive veto to similar legislation. Pros Reimportation of prescription drugs would help lower drug costs in the U.S. and allow consumers to have more access to prescription drugs. More people would be able to afford the drugs they need since the drugs would be much cheaper from foreign countries. Currently, Americans pay two to four times more than consumers in other countries for the exact same drugs – manufactured by the same company, in the same facilities, and even in the same packaging (4). Reimportation would reduce Medicare and Medicaid expenditures, and thus, reduce overall government spending. Medicare will soon be subsidizing prescription drug costs, so lower drug costs would be beneficial not only to American citizens, but also to the government. American pharmaceutical companies, which do most of the world’s research and development, recoup most of their costs in the domestic market, and then sell abroad at prices far below true costs. Americans are essentially underwriting a good part of the healthcare costs of the rest of the world. Reimportation would put a breach in the pharmaceutical companies’ monopolistic protective trade barrier and would help generate the competition needed to drive down drug prices. Currently, people are importing drugs from Canada and abroad illegally, so the government has no way of supervising what drugs are coming into the U.S. If reimportation were legalized, the government would be able to better control and monitor what drugs are brought into the U.S. The FDA would also be able to enforce restriction on certain drugs subject to special controls in the U.S. Finally, the present reimportation proposal is politically viable instead of dead on arrival. The House bill does not contain HHS certification requirements the Senate bill and past bills have contained. Thus, there is at least a chance that it could succeed politically. Cons Reimportation of prescription drugs could result in consumers purchasing unsafe drugs. Increased interest in buying foreign medications would allow criminals to sell tampered or counterfeit drugs online. There is no absolute guarantee that drugs purchased over the Internet from a purported Canadian pharmacy are actually from a Canadian pharmacy. The FDA lacks the resources to stop the flood of black market drugs coming in through the mail. Reimportation could also have an adverse effect on pharmaceutical research and development. American drug companies conduct most of the world’s research and development. The pharmaceutical industry claims it needs the revenues generated in the U.S. to help subsidize research on new drugs, which can cost millions to develop. Reimportation would cause pharmaceutical companies to have less incentive to spend money in this area. The new reimportation policy would mean importing foreign price controls, which wo...