On Monday, November 23, 2020, the Pharmaceutical Research and Manufacturers of America (PhRMA), along with the Partnership for Safe Medicines (PSM) and the Council for Affordable Health Coverage (CAHC), filed suit in the United States District Court for the District of Columbia challenging a final rule issued by the United States Department of Health and Human Services (HHS) that would allow pharmacists and wholesalers to import certain prescription drugs from Canada into the United States without oversight or authorization from drug manufacturers.
The complaint alleges that the Final Rule disregards key protections of the Federal Food, Drug, and Cosmetic Act (FDCA) that are designed to ensure patient safety. The complaint notes that while Section 804 of the FDCA authorizes HHS to permit both the importation of drugs by pharmacists and wholesalers for commercial distribution and the importation of drugs by individual patients, it is effective only if the HHS Secretary certifies to Congress “that the implementation of this section will—(A) pose no additional risk to the public’s health and safety; and (B) result in a significant reduction in the cost of covered products [(i.e., certain prescription drugs)] to the American consumer.”
However, according to PhRMA, PSM, and CAHC, in the Final Rule on importation, Secretary Azar made conclusory statements as to safety and cost savings in his “certification” with no supporting evidence and essentially put the responsibility for safety and cost savings on state governments. The complaint, therefore, alleges the Secretary’s certification is contrary to Section 804 and unsupported by the record.
The three industry groups further believe that there is no proof that the Final Rule will actually result in reduced costs to American patients. In the preamble to both the proposed and Final Rule, HHS acknowledged that it cannot quantify the savings, if any, that would result from its rule, even classifying it as “not economically significant” for purposes of review by the Office of Management and Budget. The complaint argues that HHS Secretary Azar “failed to acknowledge” whether the “economic benefits of importation are likely to prove more than a ‘gimmick’.”
The three groups also argue that there are multiple aspects of the Final Rule that are contrary to the FDCA, in addition to violating manufacturers’ First Amendment rights and raising serious questions under the Fifth Amendment Takings Clause.
PhRMA, PSM and CAHC are asking the Court to hold the Final Rule to be unlawful, set it aside, and permanently enjoin implementation of the Certification and Final Rule. If the groups are successful, states will not ever successfully get an importation plan approved.
Statements as Released by The Three Industry Groups
PhRMA Executive Vice President and General Counsel James C. Stansel released a statement, in part saying, “It is alarming that the administration chose to pursue a policy that threatens public health at the same time that we are fighting a global pandemic. FDA has noted it is struggling to keep up with approving medicines while working around the clock to support COVID-19 therapeutics and vaccine development. Despite this, the administration is willing to divert precious FDA resources away from these efforts and to expose Americans to the risks that come with drug importation schemes.”
PSM Executive Director Shabbir J. Safdar released a statement, arguing “The Final Rule would create large gaps in track and trace requirements, which were enacted to help ensure safety of our drug supply chain. It encourages diversion of drugs intended for Canada, a country that opposes the Trump Administration’s proposal. And it poses liability issues for pharmacists who would be left dispensing medicine from an untraceable supply chain.”
CAHC President Joel White said, “The importation scheme envisioned in this Final Rule brings a false promise to Americans that it will result in lower cost. Providers, pharmacists and the patients they serve may no longer trust the medicines they prescribe and dispense are safe and effective. There are better ways to lower costs through increased competition, paying for outcomes, and price transparency for consumers.”
Canada Announcement
Just a few days after the aforementioned lawsuit was filed, the Canadian Minister of Health issued an order that prohibits the bulk export of prescription drugs from Canada if they face shortages.
Under the order, drugs cannot be distributed “for consumption or use outside Canada” unless the distributor has “reasonable grounds to believe that the distribution will not cause or exacerbate a shortage of the drug.”
Additionally, if a distributor distributes a drug to another person for consumption or use outside Canada, the distributor must create and retain a detailed record of the information they relied on to determine that the distribution of the drug will not cause or exacerbate a shortage, and therefore, is not prohibited under the order.
An analysis of prior Canadian drug shortages found that most of the shortages involved generic drugs, which are not one of the main targets for importation from the United States.
What Does This Mean?
Despite passing laws and rules, importation is not for the faint of heart. As this case works its way through the court system and as the United States faces an uphill battle in creating a working partnership with Canada for drug importation, only time will tell whether drug importation will become a reality or not.