FDA allows Florida to import drugs from Canada: what does this mean?

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Leslie Isenegger, Real Chemistry

FDA allows Florida to import drugs from Canada: what does this mean?

At the beginning of January, the FDA announced that it was authorizing Florida’s Agency for Health Care Administration to import certain prescription drugs from Canada. Leslie Isenegger, practice leader, corporate pricing and public affairs at Real Chemistry, answers some key questions about the implications the program could have on the pharma industry.

What is the immediate impact of the drug importation program on pharmaceutical companies and the brands they market?

We need to unpack what this FDA authorization means. It’s important to recognize that this isn’t an announcement of a formal agreement between the United States and Canadian governments. Rather, the FDA is simply telling the state of Florida that, if you make arrangements with Canadian wholesalers to import drugs, you will need to adhere to very specific rules to do so lawfully. Notably, Canada’s Minister of Health Mark Holland has said that the Canadian government will use its regulatory power to ensure its national drug supply does not face any shortages due to actions from a foreign state.

What happens next is difficult to predict. When policy announcements are made, the implementation can take a long time. With this authorization, the FDA has laid out extensive testing, reporting, and relabeling requirements that Florida will have to meet – and those requirements will involve additional infrastructure and investment before Florida can start importing any medicines.

How does this drug importation program affect patients from both an accessibility as well as safety perspective?

Florida is looking to import drugs related to three therapeutic areas – mental health, prostate cancer, and HIV– and plans to provide them to individuals receiving care through state programs, such as Medicaid or the corrections system. The importation program isn’t designed to impact all Floridians who take prescription medicines.

With respect to access to medicines long-term, that is a question of whether drug importation could impact innovation. The tangible impact on both patient accessibility to cutting-edge therapies and the impact on pharma industry is both multi-pronged and symbiotic. We likely will not see sweeping changes from many policies right away, but it’s important to remember that a drug development cycle from discovery to delivery of a drug to market takes many years.

Pharmaceutical companies are thinking about their research and development pipeline and making plans far ahead of when some of these policies will take effect. We have seen some pharma companies say, “Because of the way the IRA is structured, we’re going to think differently about what types of drugs we’re bringing to market.” Other companies are making decisions about which indications they will pursue first.

Over time, this will have ramifications for patients. For example, fewer new drugs are submitted for approval in Canada than in the United States. In countries where there is government negotiation and cost containment systems, there isn’t the same level of innovation or access as in the United States. Innovation is the lifeblood of pharma. Although it won’t be the case that we won’t see any new drugs, there is a very real concern that there will be shifts in the rate of innovation and more calculated moves about what therapies are brought to market.

Additionally, there are potential risks to patient safety. The importation of drugs could potentially lead to an increase in counterfeit drugs in the U.S. market. The World Health Organization estimates that 10 percent of all drugs worldwide are counterfeit, and the global counterfeit drug market is valued at $200 billion annually. As more states seek similar agreements with the FDA, we may see more independent businesses emerge without safe practices. While the state of Florida expects $150 million savings under the plan, the true savings is yet to be determined, as the cost of infrastructure and resources to meet the FDA requirements will require significant funding.

From a public affairs standpoint, what is the pharmaceutical industry’s reaction to this program?

We have already seen deep concern and skepticism from the Pharmaceutical Research and Manufacturers of America (PhRMA), the pharmaceutical industry’s lobbyist group that the approved plan will actually work. Stephen J. Ubl, CEO of PhRMA, said in a recent article in The Washington Post that the FDA made a “reckless decision” to approve Florida’s state importation plan. PhRMA has already filed a lawsuit on the basis over concern over the potential importation of unapproved medicines, whether from Canada or elsewhere in the world, and how it can pose a serious danger to public health.

Former FDA Commissioner Scott Gottlieb told The Washington Post he would be surprised if any drugs can actually be brought into the United States under this plan. “Canada has restricted drug wholesalers from shipping to the United States, while the FDA won’t allow drugs to be imported that come from outside the legitimate drug supply chain. It will probably be impossible to reconcile those two conditions.”

At face value, it is easy to understand the allure of drug prices in Canada, but the Canadian health system functions differently than that of the United States. And access to new medicines also differs.

The drug market in Canada is one-ninth the size of the U.S. drug market. If Canada agrees to the Florida plan and the FDA approval expands to more states, there will be no way to bulk purchase all the drugs used in the United States from Canada. As other states seek similar FDA approval, it will create more demand, and basic economics would suggest that drug prices for export to the United States are not likely to remain the same.