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 The U.S. Department of Health and Human Services (HHS) said it and
the Food and Drug Administration will propose a rule that will allow
it to authorize states and other groups to pursue pilot projects
related to importing drugs from Canada.
The agency also said it would allow drugmakers to bring drugs that
they sell more cheaply in foreign countries into the United States
for sale here, an option the companies are unlikely to embrace.
Capital Alpha analyst Rob Smith, in a research note, questioned why
manufacturers would voluntarily lower prices in the United States to
match those in Canadian or any other foreign country.
The announcement comes as President Donald Trump aims to address the
world's highest drug prices ahead of the 2020 elections and after
several high-profile policy failures.
Reuters has previously reported that the administration is
considering broadening its plans to link the cost of some drugs for
the government Medicare program to an international pricing index.
Trump also supports bipartisan drug pricing legislation designed to
force pharmaceutical companies to give discounts when drug prices
rise more than inflation.
Another piece of bipartisan legislation aimed at prices of drugs
developed using federal research funds was introduced on Wednesday
by Republican Senator Rick Scott and Senator Chris Van Hollen, a
Democrat.
The importation idea still needs to be proposed and then finalized
by Health and Human Services. The largest U.S. pharmaceutical and
biotech companies said they opposed the idea of importation through
their lobbyists PhRMA and BIO.
"There is no way to guarantee the safety of drugs that come into the
country," PhRMA Chief Executive Officer Stephen Ubl said.
Drug industry shares were slightly higher, with the NYSE Arca
Pharmaceutical Index up 0.13 percent versus a broader flat market.
STILL FAR AWAY
HHS Secretary Alex Azar said he has had prior discussion with Canada
about importation and that it would be up to the states, pharmacies
and distributors, who are expected to pursue the importation through
trial models, to navigate the issues.
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"There are hurdles of course, but the hurdles now are known. They
are being laid out and they are surmountable," Azar told reporters
on a conference call.
The Canadian health minister's office said in a statement that it
will work to understand the implications for Canadians and to ensure
it does not negatively affect supply or cost.
Earlier this month, Health Canada said the U.S. market is too large
to rely on Canadian imports as a solution to the high cost of drugs.
Any implementation is still far away given the technical steps of
rule making and that the proposals will face challenges, Evercore
ISI analysts Ross Muken and Michael Newshel said in a research note.
For instance, they said, while Democrats like importation, most
Republicans in Congress oppose it.
Senate Democrats reacted with caution to the Trump administration
moves toward allowing importation of medicines from Canada. "We have
to look at the details of this plan to see if it amounts to much,"
said Senate Democratic leader Chuck Schumer.
The first part of the proposal would allow states, wholesalers or
pharmacists to submit plans for pilot projects for Canadian drugs if
their raw materials are manufactured in the same plant as the U.S.
version. It would exclude biologics, infused drugs, injected drugs
and inhaled drugs for surgery.
The Trump Administration has had setbacks in efforts to bring down
drug prices. Its plan to make drugmakers disclose list prices in TV
ads had to be scrapped after the companies won a legal challenge,
and it abandoned efforts to force pharmacy benefit managers to pass
discounts onto Medicare recipients.
(Reporting by Manas Mishra in Bengaluru, Michael Erman in New York,
Allison Martell in Toronto, Kelsey Johnson in Ottawa and Susan
Cornwell in Washington; Writing by Caroline Humer; Editing by Steve
Orlofsky and Bill Berkrot)
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