Health Agencies Set Stage for U.S. to Import Cheaper Drugs

(Bloomberg) -- The Trump administration cracked open the door for the eventual importation of cheaper medicines from abroad, the latest salvo in a battle to bring down drug costs.

The U.S. Department of Health and Human Services and the Food and Drug Administration on Wednesday published what they dubbed a “safe importation action plan” that could allow for certain medications originally intended for foreign markets to be sold to U.S. consumers.

Importing cheaper medicines from abroad is an idea that has attracted increased bipartisan support amid a wider campaign to control the price of prescription drugs. President Donald Trump has backed the idea, as have some Democratic presidential candidates including Senator Bernie Sanders of Vermont.

Critics have said that allowing medicines from other countries to be sold in the U.S. could endanger public health and safety, but Health Secretary Alex Azar said he's seen changes in the global supply chain that warrant a shift in perspective.

“We've seen pharmacy chains similarly expand across American borders, giving a much more business to business potentiality here for importation and safe management of the drug supply chain,” Azar said during a conference call with reporters. “We've seen enhanced regulatory frameworks be implemented such as track and trace, which did not exist when this issue was last fully considered back in the Bush administration.”

The pharmaceutical industry quickly rejected the idea. Stephen Ubl, chief executive officer of the trade group PhRMA, said the importation plan is too dangerous and that the administration should focus on reducing patients' out-of-pocket costs.

“Drugs coming through Canada could have originated from anywhere in the world and may not have undergone stringent review by the FDA,” Ubl said in a statement. “Law enforcement has repeatedly warned that importation schemes could worsen the opioid crisis and jeopardize public safety. Moreover, Canadian officials have said that the policy is unworkable, and they will not risk shortages by diverting their medicine supply to the United States.”

Alexander Cohen, a spokesman for Canadian Health Minister Ginette Petitpas Taylor, said Canadian officials are in contact with their U.S. counterparts to discuss Wednesday's announcement.

Canadian officials “will be working closely with health experts to better understand the implications for Canadians and will ensure there are no adverse effects to the supply or cost of prescription drugs in Canada,” Cohen said.

Pilot Projects

Under the plan released on Wednesday, the administration will propose a rule that would authorize pilot projects developed by states, wholesalers or pharmacists outlining how they would import certain drugs from Canada that are versions of FDA-approved medicines.

The FDA will also provide recommendations to manufacturers of approved drugs seeking to import into the U.S. versions of those drugs that they sell in other countries. Azar said the pathway stems from discussions regarding the “perverse incentives of the rebate system” in the U.S. The White House abandoned a push to overhaul the drug rebate system earlier this month.

There has been “significant interest from pharmaceutical companies as to whether they could bring product on the market with a different national drug code that would enable lower list prices,” Azar said.

--With assistance from Stephen Wicary.

To contact the reporter on this story: Myah Ward in New York at mward174@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Timothy Annett

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