The practical impact of Florida drug importation from Canada
Early January saw Food and Drug Administration approval of Florida’s application to import a specific set of drugs from Canada, a longstanding idea that has now cleared a major hurdle some three years after the application was submitted.
The idea dates back to at least 2003, when Congress amended Sec. 804 of the Food, Drug and Cosmetic Act to allow re-importation, subject to FDA approval. The wait is over in one respect; in other respects, the wait continues, given the administrative hoops that exist. The approval letter imposes additional requirements on the importer, manufacturer and requestor before the drugs can move. Also, consider the approval’s scope: a limited set of brand drugs only. Generally speaking, generic drugs in Canada are MORE more expensive than their US counterparts.
Many entities in the US, from states and counties to union groups, have wanted to import drugs from Canada as the US has materially higher prices for the same drugs. Private citizens have been able to import up to a 90-day supply of certain drugs without penalty under a 2014 law, though US Customs and Border Protection has denied certain shipments. Canada was a logical choice for importation due to its proximity to the US.
The idea of legal importation by states and other entities came up during the Trump administration when then Health and Human Services Secretary Alex Azar, a former CEO of Eli Lilly, indicated that importation was safe. The pharmaceutical industry approached the Canadian government lobbying against the idea, while US-based patient support groups approached the US government in favor. The key takeaway was that Canada could not meet US demand without compromising access for its own citizens. The pharmaceutical industry was not inclined to increase supply to Canada to address US needs.
Fast Forward to 2024
Besides Florida, eight states have applied for importation: Colorado, Maine, New Hampshire, New Mexico, North Dakota, Texas, Vermont and Wisconsin. The FDA’s approval is subject to these guidelines:
- The approval is good for two years.
- The drugs are a limited group of brand drugs for HIV, mental health and cancer and other disease states. Insulin, biologics and infused drugs are out of scope. Separate approvals are required for each included drug.
- Florida’s plan is to import drugs solely for public health programs like Medicaid and health programs for incarcerated individuals.
However, there are many questions and potential barriers:
Canada is not a willing partner. Three business days after the FDA announcement, Health Canada issued a statement that would thwart American importation plans. Canada has a concern regarding possible shortages for their own citizens for key drugs.
Supply and demand. It is unlikely that Canada has adequate supply to handle US needs.
Medicaid distribution issues. It is unclear how imported drugs will be dispensed to Medicaid recipients while maintaining the pricing advantage.
Legal challenges. A lawsuit by the Pharmaceutical Researchers & Manufacturers of America last year was dismissed for lack of standing because the FDA had not yet approved importation. The FDA’s approval may generate additional legal challenges.
Final observations
The importation plan has no immediate impact on the private sector. The overall impact may be small as Canada appears unwilling or unable to export in large quantities. Logistics are complex as designated wholesalers in the US and Canada need to be identified and a distribution system to Medicaid patients also needs to be established. The approval is only for two years, so it is not an attractive business proposition for long-term budget impact.