This summer has been the summer of reimportation with the Trump administration proposing pathways for national reimportation. The states have been active as well with Florida adding to Vermont and Colorado with state reimportation laws.
In an effort to lower the price of prescription drugs for residents of Florida, Governor Ron DeSantis recently signed into law a bill that provides the state with the ability to pursue federal approval to import drugs from Canada. If the plan is enacted, it would be implemented by the Florida Agency for Health Care Administration, and would focus on importing drugs for Medicaid and county health departments. The bill also authorizes a second international importation plan, which would be implemented by the Department of Business and Professional Regulation, and would be directed to the broader state population.
However, in order to implement the drug importation bill provisions, the state will have to overcome significant hurdles – the first of which is getting federal approval for the plan. As we previously reported, the 2003 Medicare Modernization Act gave the Department of Health and Human Services (“HHS”) Secretary the authority to permit importation of prescription drugs from other countries “if there is no health risk to the public.” However, HHS has never actually approved any such plan.
The Florida bill also faces significant resistance from the pharmaceutical industry, which creates two additional hurdles. First, the bill hopes to exploit the cost savings that Canadian federal and local governments negotiate with pharmaceutical manufacturers. Extending Canadian drug price savings to Florida residents would ultimately result in lower drug manufacturer profits. Manufacturers may resist such efforts, and could increase their prices or change their pricing models abroad.
In addition, importing patented drugs from Canada into the US, a process referred to as “parallel importation,” without permission of the patentee is a form patent infringement. In order to prevent parallel importation, patentees can initiate a proceeding with the US International Trade Commission, which has the ability to issue a general exclusion order barring importation of the infringing goods. Thus, any drug importation efforts would likely be limited to drugs whose patents have expired.
Despite its challenges, Gov. DeSantis is optimistic about the bill’s outcome, particularly given that the Trump administration has prioritized efforts to reduce the prices of prescription drugs. However, others are more skeptical. Rep. Donna Shalala (Dem-FL), a former HHS Secretary under President Clinton, said that the bill was “pure politics,” and that it has no chance of receiving approval from the current HHS Secretary. Shalala also predicted that Canada would not agree to work with Florida, because ultimately “Canada would have to pay more if they wanted to include some group beyond Canada,” and that Canada is “not going to increase their own health-care costs to take care of Floridians.”
Two other states, Vermont and Colorado, have passed similar legislation also seeking HHS Secretary approval for their respective implementation plans. Only time will tell if any of these state-level efforts will successfully lower the prices of prescription drugs for their residents. However, they do add additional pressure to the current national conversation about how to reign-in spending on drugs.