On January 5^th, the Food and Drug Administration (FDA) announced approval for the state of Florida to purchase and import medications in bulk from a Canadian wholesaler. This approval limits the import use to Florida’s Medicaid program, government clinics, and state prisons.

FDA Importation History

In 2020, the FDA approved plans to allow states to establish prescription drug import programs with the intended goal of reducing drug prices for US citizens. Florida was the first state to apply for approval in 2020. The federal court issued a January 5, 2024 deadline for the agency to rule on the state’s application after Florida sued the agency for “reckless delay.” Florida estimates the state would save approximately 150 million dollars on drugs to treat HIV, AIDS, diabetes, hepatitis C, and certain psychiatric conditions. As of January 2, 2024, Colorado, New Hampshire, Texas, and Vermont have applications in various stages of the approval process.

Hurdles

Per Dr. Robert Califf, FDA commissioner, the agency will perform a serious vetting of applications for public health protection. States will be required to provide importation details to ensure the drug’s potency, how the state’s program will prevent counterfeit products from entering the United States, and what drugs the state seeks to import. The Canadian seller who purchases the drug directly from the manufacturer must be identified. In addition, the proposal must demonstrate where and how significant cost savings for consumers would occur. US product labeling must be approved and put on the medications. The FDA will be monitoring the state for adherence to federal regulations, especially mandatory reporting of adverse drug events.

Certain drugs are excluded for importation.

• Controlled substances (all)
• Biological products including insulin
• Infused or intravenously injected drugs
• Inhaled drugs used during surgery
• Any drugs assigned a REMS (risk evaluation and mitigation strategies)

PHSL assumes the focus of importation will be single-source brand drugs that are available in both the US and Canada in the same active ingredient, strength/concentration, route of administration, and dosage form. This would likely include oral maintenance therapies for chronic conditions that are frequently prescribed and dispensed to maximize the program impact. While there may be instances of multisource generic drugs that are less expensive in Canada, the general knowledge has been that US generics are competitive or less expensive at the pharmacy.

Even with FDA approval, importation is complex, with additional requirements for states who want to participate. After the 2020 ruling, Canada enacted a law to prevent manufacturers and wholesalers from exporting drugs which are in short supply. Some pharmaceutical companies have contractual arrangements with drug-shipping companies prohibiting deliveries to the US. Additional lawsuits are expected to be filed. PhRMA, Pharmaceutical Research and Manufacturers of America, has announced it will “consider all options” to prevent importation, including taking legal action.

Mandatory State Requirements for the FDA

• What drugs does the state seek to import?
• Who is the Canadian seller and does this Canadian seller purchase the drug directly from its manufacturer?
• Who is the importer in the U.S. that would buy the drug directly from the foreign seller in Canada?
• Who is the relabeler responsible for meeting U.S. labeling requirements?
• Who is the qualifying lab that would conduct testing of the drug for authenticity and degradation?
• How is the supply chain secured against counterfeit products? (remember, DSCSA is in place in the US and includes 2D barcode requirements)
• SIP (Section 804 Importation Programs) would initially be authorized for 2-year periods with the possibility of 2-year extensions.
• Post-importation requirements for each drug include:
  • Consumer cost savings reports
  • Adverse Event Reporting on Canadian products

Imported Prescription Operations and Billing

The importation ruling creates unanswered questions for pharmacies, regardless of location or type of pharmacy, in addition to PBMs (prescription benefit mangers), wholesalers, payers, and government agencies other than the FDA. Clarification is particularly needed around digital data requirements. The scope of potential system enhancements is unknown. Canadian imports will need to conform to current standards for electronic prescribing, product tracking, dispensing, labeling, and billing, or systems will need enhancements if the data is not in compliance with current US industry standards.

Examples of digital integrity issues may include:

1. Are new NDCs (National Drug Code) assigned to imported products? (this was the case for varenicline during the shortage where the FDA permitted Canadian product to be sold in the US)
2. Will the NDC be identified as an “imported repackaged NDC” by the compendia NDC databases?
3. Will the FDA provide an electronic identifier that would flag imported products? If not, what data will be used to identify imported products in the electronic prescription ecosystem?
4. Is the process for ADR reporting the same as domestic products?
5. Will there be new pricing benchmarks?
6. Will or how will CMS (Centers for Medicare and Medicaid Services) include imports in calculating NADAC (National Average Drug Acquisition Cost)?
7. Can organizations “force” patients to use imported products or can a patient opt-out of using a Canadian product?

Other unresolved issues remain.

1. How to calculate the FDA-required “consumer savings”
   • How will savings be passed to the consumer? Florida’s Medicaid program, government clinics, and state prisons are less like commercial and Medicare Part D plans where tiers and copays influence patient costs and options. This requirement to pass, document, and report savings to the consumers will become a more relevant requirement if imported drugs are allowed for commercial use in non-government owned pharmacies open to the public. If general use is permitted, the state will be required to calculate and report savings to the consumers.
2. Industry guidance on product returns and reverse logistics processes including recalls.

Importation has periodically been proposed as a viable method of lowering drug costs going back to the early 2000s, but it remains to be proven if the obstacles can be overcome on both sides of the border. Will consumers actually see a reduction in prescription costs? More to come!

 

Posted January 26, 2024

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