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Trump proposes rule for importing drugs from Canada; industry says it won't cut costs

[December 19, 2019] By Michael Erman and Carl O'Donnell

NEW YORK (Reuters) - The Trump administration on Wednesday said it is proposing a rule to allow states to import prescription drugs from Canada, advancing a plan announced in July that the president has said will bring cheaper prescription drugs to Americans.

Importation of drugs from Canada to lower costs for U.S. consumers has been considered for years. Alex Azar, secretary of the Department of Health and Human Services (HHS), called the move "a historic step forward in efforts to bring down drug prices and out-of-pocket costs."

Industry trade groups in both countries opposed the plan, saying it will not lower costs and could hurt Canada's drug supplies. Groups representing pharmaceutical and biotech companies called the proposal a political gesture.

Azar said HHS would offer guidance to drugmakers that wish to voluntarily bring drugs they sell more cheaply in other countries into the United States for sale here.

The pathways for importation were announced in July, when Azar unveiled a "Safe Import Action Plan."

The proposed rule still needs to pass through a 75-day comment period before being finalized, Azar said.

"We're moving as quickly as we possibly can," he added.

Governors of states including Florida, Maine, Colorado, Vermont and New Hampshire have already expressed interest in importing drugs from Canada once the pathway is fully in place, Azar said. States would be required to explain how any proposed drug imports would reduce drug prices for consumers.

Jim Greenwood, head of biotech industry trade group BIO and a former Republican congressman, said importation would not result in lower prices for consumers, citing nonpartisan budget experts and past U.S. Food and Drug Administration commissioners.

"Today's announcement is the latest empty gesture from our elected lawmakers who want us to believe they're serious about lowering patients’ prescription drug costs," Greenwood said in a statement.

CANADA DRUG SUPPLY 'INSUFFICIENT' FOR U.S. MARKET

The Canadian government criticized the plan. Its U.S. ambassador said last month that importing medicines from Canada would not significantly lower U.S. prices. Reuters previously reported that Canada had warned U.S. officials it would oppose any import plan that might threaten the Canadian drug supply or raise costs for Canadians.

"Our government will protect our supply of and access to medication that Canadians rely on," said Alexander Cohen, a spokesman for Canada's Minister of Health.

"We continue to be in communication with the White House and the U.S. Department of Health and Human Services and our message remains firm: we share the goal of ensuring people can get and afford the medication they need – but these measures will not have any significant impact on prices or access for Americans."

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Illustration photo shows various medicine pills in their original packaging in Brussels, Belgium August 9, 2019. REUTERS/Yves Herman/Illustration/File Photo

The plan also drew pushback from Canadian drug distributors.

"The drug supply is insufficient for the Canadian market, let alone trying to divert it to a much larger market like the U.S.," said Daniel Chiasson, president of the Canadian Association for Pharmacy Distribution Management.

Speaking to reporters in Florida on Wednesday, Azar said Canadians' cheaper drug prices were the result of a free ride off of American investment and innovation.

"Obviously the Canadians are going to be looking out for Canadians," he said. "We're here to put American patients first."

Many prescription medicines would be excluded from importation from Canada, such as biologic drugs, including insulin, controlled substances and intravenous drugs.

U.S. President Donald Trump, a Republican, has struggled to deliver on a pledge to lower drug costs for U.S. consumers. Healthcare costs are expected to be a major focus of Trump's re-election campaign and for Democrats vying to run against him in the November 2020 election.

The Trump administration in July scrapped an ambitious policy that would have required health insurers to pass billions of dollars in rebates they receive from drugmakers to Medicare patients.

Also in July, a federal judge struck down a Trump administration rule that would have forced pharmaceutical companies to include wholesale prices of their drugs in television advertising.

Both the House of Representatives and the Senate are putting forth drug pricing bills that contain some of the proposals Trump has advocated, such as basing public drug reimbursements on foreign drug costs.

Trump has said he will veto the Democratic-led House bill if it comes to his desk on the grounds that it would slow innovation.

"Once again, the Trump White House is tip-toeing around big pharma with a spectacularly pinched and convoluted proposal that excludes insulin and has no actual implementation date," said Henry Connelly, a spokesman for U.S. Speaker of the House Nancy Pelosi, a Democrat.

"If President Trump actually wants to lower drug prices, he should pick up the phone and tell Senator McConnell to send him the House-passed Lower Drug Costs Now Act."

(Reporting by Michael Erman and Carl O'Donnell; additional reporting from Allison Martell in Toronto; Editing by Leslie Adler, Nick Macfie and Bill Berkrot)

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