Prescription Drug Importation Progress in 2021

In an effort to reduce prescription drug pricing, there has been activity in Washington, D.C. and elsewhere (such as in CO as we discussed here in February 2021) to allow for importation or reimportation of prescription drugs and biological agents.  For clarity:

• Importation means the drug is manufactured in a foreign country for use in that country and imported into the U.S.
• Reimportation means the drug was manufactured in the U.S., is exported abroad, and then imported back into the U.S.

A previously U.S. manufactured drug may be imported back into the U.S. under two circumstances:

• by HHS Secretary for emergency medical purposes; and
• by original manufacturer of the drug. Manufacturer may choose to do this when a drug has been recalled or damaged, or for other standard inventory control practices

Current Law and Enforcement

In most circumstances, it is illegal for individuals to import drugs into the U.S. for personal use.

• Example – If a drug is approved by Health Canada (FDA’s counterpart in Canada), but has not been approved by FDA, it is an unapproved drug in the U.S. and illegal to import

The FDA cites safety and effectiveness concerns if the drug has not been approved by the FDA. However, the FDA has a policy allowing for personal importation of drugs if:

• Drug is for a serious condition and effective treatment is not available in the U.S.;
• No commercialization or promotion of the drug to U.S. residents;
• Drug is considered not to represent an unreasonable risk;
• Individual importing drug verifies in writing that it is for his/her use, and provides contact information for doctor providing treatment or shows product is for the continuation of treatment begun in a foreign country; and
• Generally, not more than a 3-month supply of the drug is imported.

On the other hand, the FDA is not enforcing the ban on importing for personal use when the product is “clearly for personal use and does not appear to present an unreasonable risk to the user.”

Final Rule Allows More Than “Personal” Arrangements with Canada

In October 2020, the FDA and HHS announced a final rule on Importation of Prescription Drugs which “allows commercial importation of certain prescription drugs from Canada through time-limited Section 804 Importation Programs (SIPs) sponsored by a State or Indian Tribe, and in certain circumstances by a pharmacist or wholesale distributor.”  A lawsuit was subsequently filed to block implementation of the final rule based on safety concerns and constitutional arguments. The Biden Administration moved to dismiss the lawsuit in May 2021 and in July 2021 President Biden issued an Executive Order (see Section 4, item q) directing the FDA to work with States and Indian Tribes that propose to develop Importation Programs.

Cautions plan sponsors considering whether to allow for coverage of imported or reimported drugs, subject to FDA oversight, should consider waiting for the current litigation to be resolved to see if the final rules will be implemented and to gauge the impact of the final regulations, once they are effective.  As of now, the regulatory environment is too uncertain to be sure that a plan would not be violating current federal drug importation laws.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.