Obama Pledges To Open Borders for Personal Importation of Prescription Drugs

By Douglas B. Farquhar –      

More than nine years after passage of federal legislation that would permit individuals to legally import prescription drugs from Canada, the Obama Administration appears ready to open the door to importation.  Prior administrations, including President Clinton’s, prevented individuals from legally importing prescription drugs.  We briefly mentioned this development in a recent post on President Obama’s proposed budget, but we felt it deserved more detailed attention.

The Federal Food, Drug, and Cosmetic Act (“FDC Act”) generally prohibits importation of drugs by individuals, and explicitly prohibits the reimportation of drugs manufactured in the United States by individuals or entities other than manufacturers.  In the 1990’s, numerous individuals in the United States began importing prescription drugs (meaning finished products, as opposed to Active Pharmaceutical Ingredients) from Canada, by traveling to Canada and purchasing drugs in pharmacies there, or by mail order, either through Internet websites or through telephone purchases.  Several store-front operations opened in cities across the United States.  The stores facilitated these transactions by accepting prescriptions from customers and then arranging for the prescriptions to be filled by linked Canadian pharmacies and shipped to customers.  Individuals in the United States tend to import brand-name drugs, rather than generics, because the prices of generic drugs in the United States are favorable compared to those in Canada, while many brand-name drugs are much less expensive in Canada than in the United States.  FDA initiated legal action against one chain of these storefront operations (Rx Depot), and successfully sought an injunction shutting down the store and securing financial penalties against it.

In 2000, Congress, as part of the appropriations bill for FDA, included a provision allowing personal importation of prescription drugs if the Secretary of Health and Human Services (acting on behalf of FDA) demonstrated that “reimportation poses no additional risk to the public’s health and safety.”  Likewise, in the 2003 Medicare Prescription Drug, Improvement, and Modernization Act, a provision was enacted that required a system to be created for importation of prescription drugs from Canada, upon certification of safety and cost savings.  The provisions, codified in Section 804 of the FDC Act, are only effective if the Secretary of Health and Human Services (who has authority over FDA) certifies safety.

FDA has long opposed permitting individual imports of prescription drugs except under very limited conditions that do not include drugs which are approved for use in the United States.  Successive Secretaries of HHS have decided, therefore, that adequate protections of safety are not possible.

However, the recent budget proposal for FDA issued by the Obama Administration states that the budget “supports the Food and Drug Administration’s (FDA’s) new efforts to allow Americans to buy safe and effective drugs from other countries.”  Apparently, this is a reference to Section 804’s provisions, and may signal that officials appointed by President Obama are willing to open the gates to legal importation of drugs from Canada.