“The likelihood of this actually materializing is negligible,” said Eric Miller, a Washington-based trade consultant. “[The FDA knows] that the pharmaceutical companies are not going to oversupply the Canadian market.”
While the move allows Biden to claim another drug pricing win on the campaign trail, pollsters and political operatives said the fact Americans are unlikely to see their drug prices go down by November means the FDA’s decision is unlikely to have any tangible effect on the presidential election.
“It’s not happening right now,” said Jared Leopold, a Democratic strategist. “People aren’t going to see the impact of that before election time.”
Here are five questions the FDA’s move raises.
Will state importation programs actually help lower drug prices?
Erin Fox, a pharmaceutical supply-chain expert and senior pharmacy director at the University of Utah Health, said patients will not begin to save money just because the FDA approved Florida’s plan.
“To me, this is Florida getting to say they [are] doing something to help with high prices, but when it inevitably doesn’t work, they can blame others,” Fox said.
Florida still has a number of obstacles it must overcome before drugs can be imported. The state must get a green light from the FDA for a list of medicines it wants to import, have a system to ensure their safety and authenticity, and relabel imported medicine to reflect FDA-approved labeling.
“Under federal law, each drug that’s offered for importation under the plan will have to undergo a detailed FDA review,” said Lowell Schiller, chief legal and regulatory officer at Aetion and former FDA principal associate commissioner for policy. “It remains to be seen how that review process would play out.”
Canada updated its regulations in 2021 to prevent drugs intended for Canadian consumers, including medicines eligible for bulk importation by the U.S., from being sold for use abroad if those exports could cause or worsen a drug shortage.
Personal importation — individuals filling prescriptions in Canada to take back to the U.S. — is generally allowed under Canadian law; it’s technically illegal in the U.S., but the FDA permits bringing medicines over the border
under certain circumstances.
Drug companies have indicated they won’t provide extra cushion to the products designated for the smaller Canadian market, Miller said, leaving the country with little wiggle room to export.
“I don’t see this as a really viable path forward even for one state, let alone multiple states or the U.S.,” said Stacie Dusetzina, a health policy professor at Vanderbilt University Medical Center.
Former FDA Commissioner Scott Gottlieb said those limitations essentially preclude drug importation under the Florida plan from becoming a reality.
“Canada has made it impossible for this policy to be implemented,” Gottlieb said. “No wholesaler in their legitimate supply chain can ship to the U.S., and the FDA policy won’t allow drugs to be imported that are outside the legitimate supply chain.”
How is Canada reacting?
The Canadian government has long opposed U.S. efforts to import cheaper drugs from its country. A nation with a population about one-tenth the size of the U.S.’ can’t meet Americans’ prescription drug demand without risking its own supply, officials have argued.
“Canada will use all necessary measures to safeguard its drug supply, preserving access to needed drugs for Canadians,” Canadian Embassy spokesperson Diana Tan told POLITICO in December before the FDA decision.
Health Canada and Prime Minister Justin Trudeau’s office didn’t immediately comment on the FDA decision.
Will other states follow suit?
A handful of states, including Colorado, Maine, New Hampshire, New Mexico, Texas and Vermont, have passed drug importation laws in recent years. Many of them put their implementation plans on pause as they waited for the FDA’s response to Florida’s application.
The FDA’s decision has created a path for some of those states to push forward with their plans — and for new ones to join them.
“There’s some states that are continuing to look for ways to reduce drug costs for consumers in their state. Florida has long pursued this initiative. We’re looking forward to seeing with this approval what the state will be able to negotiate with Canada and what other states can learn from that,” said Hemi Tewarson, executive director of the National Academy for State Health Policy.
Colorado, which is the next furthest along in the implementation process after Florida, submitted its application to the FDA in December 2022 and has waited for more than a year for its approval. In
a report to lawmakers last month, Colorado health officials said they anticipated submitting an updated application to federal officials in early 2024.
But the long and difficult road ahead for Florida, which now grapples with the challenges of implementing its program in light of continued opposition from Canadian authorities, may leave some states continuing their wait-and-see approach.
The North Dakota legislature, for instance, passed a bill in 2021 to study the feasibility of establishing a drug importation program. But Mark Hardy, executive director of the North Dakota Board of Pharmacy, doesn’t think lawmakers will be champing at the bit to move forward with a similar program after Friday’s announcement.
“The pressure point isn’t always so hard on the FDA’s stance on it and how they approve it. It’s more about how you develop a meaningful program,” Hardy said. “As Florida moves forward, that’ll help shine a little light on if it actually is a reasonable option given the stance of the Canadian authorities or if there’s other policy solutions that can be looked at.”
What are the political implications?
The Biden administration is eager to show voters that it is responding to their pocketbook issues as economic worries remain top of mind heading into the 2024 election. But political operatives and pollsters said the FDA’s decision is unlikely to sway voters unless they directly see the costs of their own prescription drugs go down.
“The announcement itself is not going to have an impact. [The question is] how quickly can this be implemented, will people actually feel it, and is it enough to overcome the negative sentiments right now? We just don’t know the answer to that question,” said Patrick Murray, director of the Monmouth University Polling Institute.
Leopold said Biden’s moves allowing Medicare to negotiate prescription drug prices and cap insulin prices are likely to have a bigger impact on voters.
“Both Biden and to a smaller degree [former President Donald] Trump can claim some level of credit on this, but it doesn’t change the broader dynamic on prescription drugs where Biden has a huge advantage on that fight,” Leopold said.
What does this mean for the pharmaceutical industry?
The decision represents another setback for the pharmaceutical industry, which has fought against importation policies for decades. It follows on the heels of the Biden administration’s decision in December to assert its “march-in” rights, in which the government can license the patents of certain high-cost drugs developed with taxpayer funds to other companies.
However, the questions swirling about the feasibility of the program might blunt the impact, industry executives say.
“While importation sounds like a convenient and impactful tool in dealing with pricing concerns, in reality it is unlikely to yield any real savings to the American consumer,” Biotechnology Innovation Organization Chief Policy Officer John Murphy said. “And, what is more, full implementation is likely to raise more safety concerns than cost savings”
Further, one policy expert who has worked with FDA and pharmaceutical companies said that although the decision could seem like an initial advocacy defeat for drugmakers, “they always find ways to make it not so bad or not bad at all.”
“I’m sure the industry would prefer not to have to deal with this. But the odds of the industry taking any substantial hit off of it is not that great,” said the expert, who was granted anonymity to speak freely.
A lobbyist representing large companies granted anonymity to talk about the dynamics echoed the sentiment, saying, “no one’s planning to hold midnight meetings” on the policy and are prepared to deal with it.
The implementation decision also means that drugmakers will likely face another legal front in the war on drug pricing. The industry already has nine lawsuits pending against the Inflation Reduction Act’s provisions compelling Medicare to negotiate the price of some of the most expensive drugs.
“As always we consider all of our options when a policy is passed, so that’s what we’ll do again,” PhRMA spokesperson Nicole Longo said when asked whether the trade group would sue.
Peter Maybarduk, who directs the progressive Public Citizen’s access to medicines group, said the cultural shift — including Republican support for these policies — indicates that the pharmaceutical industry’s influence is waning slightly.
“The Death Star is vulnerable. It is still a weapon of mass destruction, but it is weakened and it can be defeated,” he said. “The climate has changed. It’s taken a while to get there, a lot of organizing — and much further to go.”