Importing drugs: a viable solution? - Health Policy Update

The cost of prescription drugs continues to be a serious access issue in the United States. It is of particular concern for the elderly and the disabled who utilize the most prescription drugs.

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A growing number of people are responding to this situation by purchasing their medications at lower prices from other countries, principally Canada.

President Bush recently signed a Medicare prescription drug benefit, and a number of private sector health plans are developing options that provide increased prescription drug coverage. However, even if these and related initiatives are implemented, many individuals will still experience significant out-of-pocket expenses for their prescription drugs.

Importation as a solution to the problem

Wide-scale importation of prescription drugs from other countries for use in the U.S. is being explored by several states as a partial solution to reducing the cost of prescription drugs. This activity is driven by the significant price differential between the costs of prescription drugs in the United States compared to the cost of the same drugs in other countries.

For example, one study showed that, based on the average price of prescription drugs in each country, $1 of cost for prescription drugs in the U.S. translates to 64 cents in the United Kingdom, 60 cents in Germany and Sweden, 51 cents in France and 49 cents in Italy.

The reason for this price disparity is that governments in many other countries regulate drug prices. This regulation may involve direct price controls (France, Italy, and Canada); indirect control through limits on reimbursement under social insurance systems (Germany and Japan); or through controls on profits (United Kingdom).

Currently, importation of drugs for the purpose of direct sale to consumers is illegal in the U.S. However, pharmaceutical manufacturers may import drugs that have been manufactured by or for them in another country if the manufacture and distribution of these drugs meet the standards set by the Food and Drug Administration (FDA).

In response to the restrictions on prescription drug importation, several states have announced plans to set up systems to make such importations legal (Illinois and Vermont) to save money for both the state and consumers. The state of Illinois has estimated that the state could save taxpayers about $90 million per year. They also believe they can do this in a safe manner.

The city of Springfield, Massachusetts has already set up a program that is facilitating access to medications from Canada.

Since 1999, members of the U.S. Congress have also become involved in the effort to make it legal to import prescription drugs for direct sale to consumers. In 2000, Congress passed the Medicine Equity and Drug Safety Act (H.R. 5426) that allowed the importation of prescription drugs with the restriction that the secretary of Health and Human Services would have to certify that such imports would not increase health risk.

However, both the Clinton and the Bush Administrations decided that the safety concerns were too great to permit implementation of that law. This act is still in effect and could be used to authorize the importation of drugs.

In 2003, several bills were introduced in Congress designed to permit the importation of prescription drugs from other countries. The House of Representatives passed one of these, H.R. 2427, (The Pharmaceutical Marketing Access Act of 2003).

Under the terms of this Act, the FDA must design and implement a system to grant individuals, pharmacists, and wholesalers in the United States access to FDA-approved drugs from FDA-approved facilities in industrialized nations abroad. In addition, the bill does not require the certification of importation of drugs as in H.R. 5426. The Senate has received this bill but has not yet considered it.

Of potentially greater significance is the Drug and Medicare Improvement Act of 2003, separate versions of which were passed in the House and the Senate (i.e., H.R. 1 and S 1, respectively).

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The House version included a provision that would permit the importation of prescription drugs from Canada. In contrast, the Senate version did not include provisions for drug importation. The two versions are now in a conference committee for resolution.

It is widely believed that a compromise will be reached to permit reimportation to be a component of this act. This would then become law if the Drug and Medicare Improvement Act is approved and sign into law.

Positions for and against importing drugs

The FDA opposes the importation of prescription drugs. It contends that many drugs from foreign sources are of unknown quality and some of them pose a hazard to the health of those who consume them.

Examples of such hazards include drugs that are expired, subpotent, contaminated, counterfeit, improperly packaged or contain an incorrect dose. In addition, improper packaging and instructions in languages other than English are ongoing concerns.

A series of spot examinations of mail shipments of foreign drugs to consumers in the U.S. conducted by the FDA in July and August of 2003 found that of the 1,153 drugs examined, 88 percent did not meet FDA standards.

Violations recorded from this review revealed several previously unrecognized categories of non-compliance with FDA regulations and included the presence of veterinary drugs not approved for human use, drugs withdrawn from the market and drugs with dangerous interactions.

A recent study from Illinois noted that prescription medications from Canada were safe and effective. The study stated that Canadian authorities using standards that were "substantially equivalent" and sometimes exceeded U.S. standards regulated drugs sold in Canada. The study concluded that reimportation from Canada was safe.

The major pharmacy associations in the United States also oppose the importation of prescription drugs. Their analysis of the situation adds several additional concerns to the debate.

For example, they point out that the FDA has very limited resources for inspecting shipments of prescription drugs from abroad and would be unable to detect many of the unsafe drugs that cross the border.

In addition, they point out that the individuals or corporations responsible for the creation, distribution or selling of these substandard prescription drugs would become difficult to trace since it would often be impossible to tell precisely where the drugs came from or the conditions under which they were manufactured or distributed. Finally, they believe that some drugs from Canada or the European Union may often not meet FDA standards.

Strong support for the importation of prescription drug comes from consumer advocate groups. They emphasize the growing inability of seniors to pay for their prescription drugs and the human tragedies that result.

They also emphasize the high levels of profitability of the pharmaceutical industry, the amount of money that the industry spends on marketing, and the vast differential in prices charged for prescription drugs in the United States as compared with most other countries in the world.

What happens next?

Problems associated with the high cost of prescription drugs in the United States are serious and appear to be growing over time, with no clear resolution in sight. Public opinion polls indicate strong public support for the importation of cheaper drugs from other countries.

Many people in the U.S. are resorting to this practice even though it is currently illegal but rarely enforced. However, this practice is a perilous one as indicated by data from the FDA on the many potential and real health threats from imported drugs, and the fact that even if the practice were made legal, FDA does not have sufficient staff to adequately monitor the safety of imported drugs.

Recently the Governors of Iowa, Minnesota and Wisconsin as well as the mayor of New York City expressed support for studying the benefits of importation for their jurisdictions. Congress continues to show strong bipartisan support for this issue as well.

While the ultimate solution is a comprehensive, affordable Medicare prescription drug benefit, few observers believe that the benefits proposed under the current versions of this legislation will totally resolve the issue. Therefore, health care providers and organizations can probably look forward to continuing turmoil in the area of prescription drug costs for the foreseeable future.

At the end of the day, affordable, safe and effective pharmaceuticals should be available for all Americans. After all, equal access to the miracle of modern medicine depends on it.

Resources

1. The newsletter with Jim Lehrer/Kaiser Family foundation/Harvard School of Public Health, "National Survey on Prescription Drugs," September 2000. (Available at www.kff.org)

2. AARP/Research Center, "Medicare Beneficiaries and Prescription Drugs: Costs and Coverage," 2003. (Available at www.reaearch.aarp.org)

3. Current legislation on drug importations pending in Congress includes H.R. 2427 The Pharmaceutical Marketing Access Act of 2003 and S.R 1 and H.R. 1 Drug and Medicare Improvement Act of 2003.

4. Web site of Representative Bernie Sanders, "U.S. vs. the World: Prescription Drug Prices," 2003. (Available at www.bernie.house.gov/prescriptions/high.cost.asp)

5. Committee on Government Reform, Subcommittee on Human Rights and Wellness, U.S. House of Representatives, Statement of William K. Hubbard, associate commissioner for policy, planning, and legislation, "International Prescription Drug Parity: Are Americans Being Protected or Gouged?" April 2003. (Available at www.fda.gov)

6. U. S. Food and Drug Administration, "FDA/US Customs Import Blitz Exams reveal Hundreds of Potentially Dangerous Imported Drug Shipments," September 29, 2003. (Available at www.fda.gov/bbs/topics/NEWS/2003/NEW00948.html)

7. Danzon, P M., "Making Sense of Drug Prices" Regulation, Volume 23, No. 1, 2000.

8. An example of a state request (i.e., from Illinois) to import prescription drugs addressed to the FDA may be found at www.affordabledrugs.il.gov/letters.cmf.

Georges C. Benjamin, MD, FACP, is executive director of the American Public Health Association in Washington, D.C. He can be reached by phone at 202-777-2430 or by e-mail to georges.benjamin@apha.org

Richard Levinson, MD, DPA, is associate executive director for scientific affairs at the American Public Health Association.

By Georges C. Benjamin, MD, FACP and Richard Levinson, MD, DPA

COPYRIGHT 2004 American College of Physician Executives
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