Two More States Seek to Establish Prescription Drug Importation Programs

Colorado and Florida have joined Vermont in the list of states seeking to combat high prescription drug prices by establishing programs to import drugs from Canada.  On April 29, 2019, the Florida legislature passed CS/HB 19, which directs the state’s Agency for Health Care Administration to establish the Canadian Prescription Drug Importation Program.  On May 6, 2019, the Colorado legislature passed SB19-005 to create the “Colorado Wholesale Importation of Prescription Drugs Act.”  Neither bill has been signed into law yet, but the Governors’ signatures are expected.

Similar to the Vermont law passed last year (see our summary here), the Colorado and Florida bills require the states to develop Canadian drug importation programs that comply with federal drug importation laws (21 U.S.C. § 384), including limitations on eligible drugs.  Each state’s program must meet the federal requirements that the imported drugs will not pose additional risk to public health and will generate cost savings for consumers.  By July 1, 2020, Florida’s Agency for Health Care Administration must submit a request to the U.S. Secretary of Health and Human Services (HHS) for approval of the state’s program.  The Colorado Department of Health Care Policy and Financing must submit its request for program approval to the Secretary of HHS by September 1, 2020.

Florida’s bill also allows for the development of an “International Prescription Drug Importation Program,” which will permit the state to import drugs from “foreign nations with which the United States has current mutual recognition agreements, cooperation agreements, memoranda of understanding, or other federal mechanisms recognizing their adherence to current good manufacturing practices for pharmaceutical products.”  FDA currently has a “Mutual Recognition Agreement” in place with the European Union and Cooperation Arrangements for drug products in place with Australia, Canada, Japan, Russia and Sweden.

Under the Florida bill, drugs imported under the Canadian Prescription Drug Importation Program will be limited to use for Medicaid and certain institutions owned, operated, or supported by the state or county governments.  However, Florida’s International Prescription Drug Importation Program will not be restricted to state and county purchasers, nor will the Colorado program have such limitations on use.

Federal law requires that drug importation programs generate substantial cost savings for American consumers.  Donald Trump recently said that his administration will allow states to import drugs if they can be purchased at a lesser price.  However, it is unclear whether a lesser purchase price will equate to substantial cost savings for American consumers.  Despite public opinion that drugs can be purchased at significantly lower costs from Canada and other countries, proving that importation results in cost savings may be a difficult hurdle for states to overcome.  As we previously reported (see here), Vermont’s Agency of Human Services, in designing that state’s “Canadian Rx Drug Import Supply Program,” issued a report suggesting that it may cost more to implement and operate a drug importation program than the amount of savings the state would recognize from such a program.  Vermont’s formal request for approval of the state’s drug importation program is due to the Secretary of HHS by July 1, 2019.

Although state drug importation programs seem to have gathered some steam, it still remains to be seen whether these programs can be designed to meet the federal requirements and whether the Secretary of HHS will approve such programs.  We will continue to monitor and report on federal and state developments and actions related to regulating drug pricing.