Trump plan lets states import Canadian drugs

President Donald Trump has made lowering the cost of drugs a key part of his agenda but has struggled to rack up any big wins on the issue through new policy. The importation announcement’s timing — on impeachment day — shows how the president hopes to use lower drug prices to woo suburban voters. But the administration has retreated on some of its more ambitious pricing proposals, like a plan to dramatically reform the drug rebate system, while other measures have been struck down by the courts or are still being drafted.

For now, the importation plan presented by HHS Secretary Alex Azar to reporters excludes controlled substances, IV drugs and pricey biologics such as insulin and the popular drug Humira to treat rheumatoid arthritis. But Azar said that as states prove cost-savings and drug safety under the plan, Congress could look at expanding it to more complex and expensive medicine.

Canada and its provinces get drugs at lower cost as a result of price regulation and negotiations with drug companies. There’s no way to estimate how much Americans might save from the Trump plan because it will depend in part on importation applications HHS will receive, Azar said.

In addition to the main proposal, the administration put forward an alternate importation route that could benefit drugmakers by letting them use a loophole to sell their drugs at a lower price, bypassing their payer contracts. Drug companies have argued that the heavy discounts they provide in their contracts with insurance companies and others force them to keep their list prices high.

The administration has pursued various strategies on drug prices. It held talks in September with House Speaker Nancy Pelosi on her bill, which enables the government to directly negotiate drug prices, but ultimately threw its weight behind the bipartisan Senate plan, which has minimal support from Republicans.

Pelosi spokesperson Henry Connelly said the White House move was “tip-toeing around Big Pharma with a spectacularly pinched and convoluted proposal that excludes insulin and has no actual implementation date.”

CEO Jim Greenwood of the drug industry group BIO, meanwhile, called the proposal an “empty gesture” and a “dangerous importation scheme” that would endanger patients’ safety without saving them money.

Though drugmakers hate the importation idea and Canadian officials warn it would cause drug shortages in their country, Trump has made it a cornerstone of his promise to lower high drug costs as other proposals have faltered. The issue does not cleanly fall along party lines, but it is typically more popular with Democrats than Republicans.

Four states have passed legislation to import medicines, each of which would need federal approval to implement. Trump kicked the issue into overdrive when Florida approved an importation scheme earlier this year. He told supporters at a Florida rally that Gov. Ron DeSantis would soon “be able to go out and negotiate to his heart’s content.” The Florida governor has said he has the president’s full backing despite some possible pushback from within the administration.

But it will likely be years before states can actually implement importation plans. The administration’s draft rule will need to go through public comment. Then states will have to draft plans that comply with the rule, and Azar said imported drugs will need to bear new FDA-approved drug labels and go through safety testing. All these requirements could prove prohibitive for possible importers.

The idea of importing lower-cost drugs has been brought up repeatedly since Congress imposed the current strict import limits in 1987, but safety concerns and industry pushback have held the restrictions in place. In the 2003 law that created the Medicare Part D drug benefit for seniors, Congress allowed medicines to be imported if HHS certified them as safe and leading to reduced costs for American consumers. No HHS Secretary has ever done so. A high-level government report in 2004, co-authored by Azar as a then-HHS lawyer, argued against the idea. Azar as recently as last year called importation a “gimmick” that would not lower costs.

Trump health officials have said the administration’s strategy was to enable states and companies to test the import programs, saying they were confident that modern drug distribution supply chains would allow federal drug regulators to guarantee the products’ safety.

Azar told reporters that there has been a longstanding safety debate, but “supply chains and markets have changed over time.” His agency will seek public comment on whether the price reductions would go directly to consumers and other issues.

The drug industry has opposed — with success, to date — other sweeping drug pricing reforms proposed by the administration, including an index linking payments for physician-administered drugs to lower international prices and a requirement to list prices in advertisements.

In Florida, DeSantis has asked lawmakers to appropriate $20.4 million to start an importation program that involves 150 drugs for the state’s 4 million-patient Medicaid program, and its prison system. State officials have estimated their plan would save $150 million annually. Little of the money would go to consumers, who have few out-of-pocket costs in these health programs.

Critics have said that importing medicines would not significantly lower consumers’ costs, especially if states relied only on Canada. That country’s “market for pharmaceuticals is too small to have any real impact on U.S. drug prices,” Canada’s acting ambassador to the U.S., Kirsten Hillman, said in November after a meeting with White House aides.