The Trump Administration Drug Importation Action Plan

As part of the Trump Administration's Blueprint to Lower Drug Prices, on July 31, 2019 the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) released a Safe Importation Action Plan (Action Plan) outlining the Administration's intention to develop two pathways for the legal importation of certain drugs. The Action Plan, however, provides only a broad overview of the Administration's proposals, and there are many details which will need to be clarified and administrative processes to navigate before the proposals can be implemented. 

Background on Proposals to Allow the Importation of Drugs into the US

For decades, various administrations have considered ways to access cheaper drugs by importing medications from foreign countries via the potential implementation of amendments to existing law prohibiting importation by entities other than the drug manufacturer. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 amended FDCA § 804 to permit the importation of drugs from Canada in certain limited circumstances. The Act only allowed for the importation of Canadian drugs if the Secretary of HHS certified that such imports posed no additional risk to public health and also resulted in a significant cost reduction to American consumers. However, since the passage of the Act, HHS has not approved drug importation plans due to safety and other concerns. Since 2003, dozens of bills have been introduced in Congress to provide a legal pathway for the importation of drugs from Canada and other industrialized countries. In 2019 alone, several bills—including most notably, the Affordable and Safe Prescription Drug Importation Act (S. 97, H.R. 447) and the Safe and Affordable Drugs from Canada Act (S. 61, H.R. 478)—have been introduced in both the House and Senate. While many of these bills include similar provisions, they often differ in the details of what countries are included, what entities in the US are authorized to import, which types of drugs may be imported, and whether the bills include restrictions on drug manufacturers from retaliating against suppliers of foreign drugs or otherwise contracting around the obligations set forth in the legislation.

In addition to proposed federal legislation, a growing number of states—such as Vermont, Maine, Florida and Colorado—have recently passed laws legalizing the importation of foreign drugs. Many of these state laws rely on federal action and the importation authority granted to the Secretary of HHS under FDCA § 804, and are adapted from model legislation developed by the National Academy for State Health Policy.

In the past, such proposals have largely been met with resistance by the FDA. In 2017, four former FDA commissioners signed a joint letter to Members of Congress warning that the importation of foreign drugs was "likely to harm patients and consumers." Indeed, HHS Secretary Alex Azar said as recently as May 2018 that drug importation from Canada was a "gimmick." In contrast, the Administration's Action Plan was met with approval and support by both Secretary Azar and FDA Commissioner Sharpless, who tweeted that the "FDA supports @POTUS and @SecAzar's efforts to bring down drug prices" and that "The Safe Importation Action Plan is the result of the hard work by dedicated FDA staff in close collaboration with HHS & the White House."

Summary of the Action Plan

The Action Plan broadly outlines two proposed pathways through which HHS and FDA will allow for the importation of certain drugs originally intended for non-US markets. Notably, both pathways rely on parties other than the federal government—such as states, wholesalers, pharmacists, and manufacturers—to demonstrate that eligible drugs can be imported into the US safely and with the required cost savings.

• Pathway 1: State-Based Demonstrations: The Administration proposes to release a Notice of Proposed Rulemaking (NPRM) under the authority granted in FDCA § 804. The NPRM will authorize states, wholesalers or pharmacists to submit demonstration project proposals to HHS which outline a plan to import certain types of drugs from Canada. While the actual language of the NPRM was not released, the Action Plan provided a general outline of the NPRM's intended content:
  • Demonstrations: Demonstrations will be time-limited and require regular reporting to ensure safety and cost conditions are met. Applications from states need to propose an arrangement with a wholesaler or pharmacist that meets the conditions of the NPRM. Proposed demonstrations must discuss how the program will comply with track and trace requirements, FDCA labeling requirements, and importation entry requirements, among others.
  • Eligible Drugs: The NPRM will exclude controlled substances, biological products, infused drugs, intravenous drugs, drugs inhaled during surgery, drugs with REMS, and certain parenteral drugs. Eligible prescription drugs must:
  • be authorized for sale in Canada;
  • be versions of FDA-approved medications;
  • contain only active pharmaceutical ingredients manufactured at facilities that also manufacture such ingredients for the FDA-approved version of the medication;
  • be formulated using processes, specifications, and facilities in accordance with the approved new drug application for the FDA-approved version; and
  • be labeled to indicate that they were originally intended for distribution in Canada.
  • Cost Requirements: The NPRM will explain requirements for demonstrating that the imported drugs result in a significant cost reduction to American consumers.

• Pathway 2: Manufacturer Importation: FDA will allow manufacturers of FDA-approved drugs the ability to import foreign versions of those drugs for sale in the US if the manufacturer can establish that the foreign version is the same as the American version (such as through manufacturing records). Under this pathway, FDA would allow approved drugs to use a different NDC number than their American version, which the Action Plan suggests will allow the manufacturer to introduce the product at a lower price. The Action Plan notes that this pathway relies on existing supply chain safeguards and requirements, as the drugs would be authorized for importation through conventional channels, but offers no further details on how manufacturers would comply with such safeguards.

Outstanding Questions and Concerns

The Action Plan provides a limited overview of the Administration's proposed plans, and many important issues and questions remain unclear or unanswered. For instance:

• On July 19, 2019, Secretary Azar directed the FDA to establish a working group on drug importation in order to address price increases. HHS noted that "[t]his working group will examine the potential to promote competition for drugs that are off-patent or off-exclusivity and produced by one manufacturer" and that such proposals "stand[] in contrast to proposals to import a broader range of drugs[.]" The relationship between the working group and the Action Plan is not clear, nor is there clarity in how the mandate to promote competition for off-patent or off-exclusivity drugs will coexist with the proposals in the Action Plan.
• The specific safety and supply chain safeguards required under either of the Action Plan's pathways are left to the discretion of the Administration through future agency actions. It is not yet clear how such safeguards would be maintained, how stakeholders would be responsible for establishing and demonstrating compliance, or whether the costs of compliance would negate or seriously diminish any cost savings.
• The Action Plan does not provide a timeline for the release of the NPRM or the implementation of the second pathway. It is not clear when additional steps by the Administration may be taken on either pathway.
• The NPRM requires compliance with the statutory requirements of FDCA § 804, including a demonstration that a drug importation plan will lead to significant cost savings by American consumers. It is unclear how such savings will actually be achieved given potential supply limitations, etc.
• A number of states are in the process of submitting foreign drug importation proposals to HHS for review based on HHS' current statutory authority under FDCA § 804. It is not yet clear how any such submitted proposals will be impacted or otherwise interact with the final language of the NPRM. Similarly, it is not clear how states may respond if any existing state-level legislation ultimately conflicts with the requirements set forth in the final language of the NPRM.¹
• Canadian officials have made clear that they do not support US plans to import Canadian drugs, and that they fear such plans could lead to higher costs or drug shortages in Canada. Health Canada noted that the Canadian government is prepared to "take action to ensure Canadians have uninterrupted access to the prescription drugs they need." It is not clear how the Administration proposes to address Canadian resistance to American efforts to import foreign drugs.

In addition to commenting on these proposals as they emerge, stakeholders should evaluate the potential impact of these importation proposals on their distribution chains and current arrangements for the sale of drugs in Canada (and potentially other jurisdictions), product integrity and anti-counterfeiting efforts, and intellectual property rights.  For example, importation provisions prohibit certain manufacturer efforts to restrict importation, but the scope of such restrictions has not been tested.  We will be closely following the further development of the Action Plan, and we will provide updates to this advisory.

*Ira Stup contributed to this Advisory. Mr. Stup is a graduate of the University of Michigan Law School and is employed at Arnold & Porter's Washington, DC office. He is admitted to practice in New York. He is not admitted to the practice of law in Washington, DC.

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.