Health Care Economics
Reimportation Law Won’t End Furor Over Drug Prices
Psychiatric News
Volume 39 Number 1 page 7-7

In a Webcast panel discussion on drug reimportation sponsored by Kaiser Permanente last month, policy experts agreed that reimportation provisions in the newly approved Medicare reform bill do nothing more than preserve the status quo: states, managed care organizations, and pharmacies will be prohibited from buying large quantities of drugs from Canada and European countries that impose price controls on pharmaceuticals, but the Food and Drug Administration will likely continue to look the other way when individuals procure small amounts of prescription drugs from outside the border.

The Webcast panel included Thomas McGinnis, Ph.D., director of pharmacy affairs for the FDA; John Rother, legislative analyst for the AARP; and Jack Coffee of the American Enterprise Institute, a conservative think tank in Washington, D.C.

The reform law, which was signed by the president last month, allows for importation of prescription drugs from Canada—and from nowhere else—but with the caveat that the secretary of Health and Human Services (HHS) must certify the safety and effectiveness of imported drugs. The latter provision is deemed a “poison pill,” since HHS Secretary Tommy Thompson—and probably any future secretary—is unlikely to proffer guarantees of safety (Psychiatric News, December 19, 2003).

The provision is viewed as a windfall for pharmaceutical companies, which have feared two things: government control of prices and large-scale drug importation.

During the Webcast McGinnis said that because of the provision, several states that have made moves to import drugs from Canada—including Minnesota, Massachusetts, Illinois, and Vermont—would be in violation of federal law if they followed through. And he predicted that efforts by other states and entities would be halted because of the new law.

Meanwhile, however, small-scale importation of drugs by individuals—also technically illegal—is likely to continue and probably increase. McGinnis explained that the FDA’s “compassionate use” policy stems from the 1950s when individuals with cancer and other life-threatening diseases who frequently had exhausted therapies approved within the United States began to seek drugs from other countries where the drug approval process was much quicker.

Webcast panelists agreed that the issue of drug reimportation has prompted some unexpected alliances between liberals and free-market conservatives who favor opening borders to pharmaceutical drugs from other countries to foster competitive pricing in the United States. Rep. Gil Gutknecht (R-Minn.), for instance, has sponsored a bill allowing importation of drugs from 25 industrialized countries without requiring a certification of safety by the HHS secretary. That bill was approved in the House with bipartisan support, but has stalled in the Senate.

But Coffee, of the American Enterprise Institute, said he parts with free-market conservatives on the issue. In the event of large-scale reimportation, “what will happen down the road is that Canadian prices will go up, rather than American prices going down,” he said.

Moreover, American manufacturers of drugs shipped overseas and reimported to the United States at cut-rate prices are liable only to cut off the supply. “Pfizer isn’t going to continue to send 10 times last year’s supply of Celebrex to Canada only to lose all its profits in the U.S. market,” he said.

Coffee argued also that U.S. drug makers are essentially bearing the global burden of research and development, because of the very large sums they pour into the lengthy American drug-approval process.

However, Rother, of the AARP, predicted that public demand would force some Congressional action on reimportation. “Congress will take action in 2004 on reimportation just because [legislators] think the public has already made up its mind,” he said.

He added that bilateral agreements could be forged between American and Canadian pharmacies to preserve supplies and ensure safety. “I don’t think the safety problem is insurmountable, at the border,” he said. “What is much harder is the issue of people who buy through the Internet, when you are not really sure whether you are purchasing drugs through an approved pharmacy.”

All three seemed to agree that reimportation is at best only a short-term solution, and that in the long run the answer lies in solving the problem of high drug costs in the United States. It was also agreed that many new, higher-priced drugs may not necessarily be any more effective than older, lower-priced drugs, and that what is critical is research to help determine the real clinical value of new drugs.

Rother said many factors—including pharmaceutical marketing and direct-to-consumer advertising—were driving the high cost to consumers. McGinnis predicted that efforts to speed up the drug-approval process and the proliferation of generic drugs would work to bring prices down in the future. ▪

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