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Florida Gets the OK. But Will Drug Importation from Canada Actually Happen?

MHE PublicationMHE March 2024
Volume 34

Canadian health officials warn that maintaining a drug supply for Canadians is their priority. The staunch opposition of the U.S. pharmaceutical industry may also be an obstacle to imports from north of the border.

Florida has become the first state to receive approval from the FDA to import certain prescription drugs from Canada, with the aim of lowering costs. However, some experts are skeptical that the medications will ever make it across the border.

Headshot of Randy Hatton

Randy Hatton, Pharm.D.

“I don’t think Canada has any interest in this occurring,” says Randy Hatton, Pharm.D., a clinical professor at the University of Florida College of Pharmacy in Gainesville. It’s likely in Canada’s “best interest to maintain their own pharmaceutical supply chain,” he adds.

KFF, formerly known as the Kaiser Family Foundation, put out a policy brief after news of the approval was announced that cautioned that Florida must take several steps before any drugs are imported and that several other obstacles are in the way, “meaning Floridians may not see the benefits of these efforts for some time.”

Yet Florida sees drug importation from Canada as a way to reduce the price the state pays for medications used by certain groups, such as some older patients, incarcerated individuals and foster children, in a limited number of state programs and could then be expanded to those covered by Medicaid. (Florida is one of the handful of states that has not expanded Medicaid under the Affordable Care Act.) The state claims the imports would save the state more than $180 million each year. The news release from Florida Gov. Ron DeSantis’ office announcing the approval says that the state would start by importing “a small number of drug classes, which will include maintenance medications to help individuals who have chronic health conditions.” The conditions listed in the release included HIV/AIDS, mental illness, prostate cancer and urea cycle disorder.

Pharma opposition

Jeff Johnson

Jeff Johnson

The FDA approval of the plan in January is “a very important first step,” says Leigh Purvis, M.P.A., prescription drug policy principal in AARP’s Public Policy Institute. Florida is one of several states that have passed laws to import prescription drugs, a disparate group that includes Texas, Maine, Vermont and New Hampshire. With the FDA giving the green light to Florida, “it proves it can be done,” says Jeff Johnson, M.Div., state director of AARP Florida.

If Florida can save money on prescription drugs used by patients on Medicaid, AARP is hoping the savings would be redirected to other needs, such as long-term care for those who are covered by Medicaid, Johnson says.

Although Florida passed its law in 2019, it first needed FDA approval to proceed. Both former President Donald Trump and President Joe Biden encouraged the FDA to work with states on plans to import medications. The FDA had previously expressed concerns about the safety of imported drugs. The pharmaceutical industry (a staunch opponent of drug importation) has used possible harm from less-safe drugs as one of its main talking points.

“We are deeply concerned with the FDA’s reckless decision to approve Florida’s state importation plan. Ensuring patients have access to needed medicines is critical, but the importation of unapproved medicines — whether from Canada or elsewhere in the world — poses a serious danger to public health,” Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, said in a prepared statement. Ubl also said the trade group “is considering all options for preventing this policy from harming patients.”

Hoops to jump through

Before importation can begin, Florida will have to submit a request to the FDA for each drug it seeks to import and receive the agency’s approval. If a drug received approval, the state would have to conduct quality testing and make sure drug labels meet FDA standards, says Meredith Freed, M.P.P., a senior policy manager with KFF’s Program on Medicare Policy and one of the co-authors of the policy brief. Because of those requirements, “it’s really not clear what the timeline will be” for Florida to begin the program, Freed says.

Meredith Freed, M.P.P.

Meredith Freed, M.P.P.

It’s also not clear whether Canada will be in a position to export many medications. The country has population of just 40 million, which is larger than Florida’spopulation of approximately 22 million, but it is not that much larger.

Health Canada, part of Canada’s federal government, issued a statement after the FDA decision, saying that it has “listened to Canadians and has consulted with industry stakeholders, pharmacists, provinces and territories, patient groups and medical associations. All agree that the Canadian government must remain focused on ensuring a stable and adequate supply of prescription drugs for Canadians. Health Canada stands ready to take immediate additional action, if needed, to help safeguard the Canadian drug supply.”

In Canada, the government regulates the price of prescription medications, so prices are lower for brand-name drugs than they are in the United States, Hatton says. By importing drugs from Canada, “states are trying to tap into the benefit of government regulation of drug prices,” he added.

For a long time, international comparisons have shown that the list prices for brand-name prescription drugs are much higher than they are in other countries, including Canada. Earlier this year, the Commonwealth Fund published a study comparing U.S. net prices (prices paid after rebates are factored in) with international prices for the 10 drugs selected for Medicare price negotiation, and even those net prices were considerably higher than the retail list prices in Canada.

Although, in theory, Florida could try to bargain hunt and import medications from other countries where the government negotiates drug prices, the state would likely run into the issue of countries not wanting to disrupt their own supplies, Hatton says.

Naturally, other states are watching Florida’s drug importation efforts. Freed says other states may be encouraged because they “don’t have to start from scratch.” Purvis says other states may start pushing their own importation plans. The cautious ones may let Florida be the early adopter and “could also wait to see how Florida implements it.”

IRA ripple effect

The federal government isn’t going shopping for drugs north of the border, but it is expecting to see some drug cost relief from the Inflation Reduction Act (IRA) of 2022, which authorizes the CMS to negotiate prices for Medicare for certain prescription drugs. Assuming myriad court challenges to the law fail, negotiated prices for the first set of 10 drugs are scheduled to go into effect in 2026. By some estimates, the federal government will save $100 billion through 2031 as a result of IRA price negotiation and lower prices.

The upcoming CMS negotiations “could have a major impact on what the government pays for medications,” Hatton says. Approximately 80% of prescriptions filled by Americans are for generic drugs, but brand-name drugs account for approximately 80% of the spending on prescription drugs, according to the HHS.

If the CMS negotiations help bring down drug prices at the federal level, some states might copy them for their own negotiations over drug prices, Purvis says. “States have finite budgets,” she added. “They really are being pressured by high drug prices.” Johnson predicts that these negotiations are the “path that will help bring down drug costs.”

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