April 7, 2020

Drug Importation

How it could work

Drug importation proposes to lower drug spending in two ways: 1) by purchasing drugs from other countries where prices are lower; and 2) encouraging drug manufacturers to lower their prices in the U.S. to discourage purchasing drugs from other countries. In theory, the cheaper imported drugs would act like a new drug manufacturer, creating market competition that lowers prices. However, concerns about the safety and availability of imported drugs could reduce this market competition effect.

In late 2019, the Trump Administration proposed a rule under the Food and Drug Administration (“FDA”) to allow drug importation in certain circumstances. Under this proposal, drug importation would be restricted only to drugs approved for sale in Canada that meet the same approval requirements as drugs approved in the U.S. Drug importation would be done at the state level, and the state would need to receive approval from the FDA for its importation plan. The state or its agent would be required to test imported drugs for authenticity. The Trump Administration’s proposed rule said that savings from drug importation could not be estimated, citing a lack of information. The Canadian government publicly opposes the drug importation plan, noting that the Canadian drug supply is only about one-tenth of the U.S. market.

What the experts think

The expert panel agreed that any savings from drug importation would be minimal, with two-thirds saying importation would minimally reduce drug spending and one-third saying importation would not reduce drug spending. Experts generally believed that drug importation would have no effect on either drugs’ list or net prices, and experts agreed that most patients would not see any increase in drug access from importation. However, experts did agree that uninsured patients may see a moderate increase in drug access.

Experts generally agreed that drug importation minimally advances drug spending policy, though some experts believed its effect would be moderate while others believed it would have no effect at all. Experts all agreed that the magnitude of drug spending impact was a weakness of the policy, and they generally agreed that the ability to implement, the size of the affected patient population, and evidence-base in support of the policy were also weaknesses. Experts generally agreed, however, that the precedent-setting value of the policy was a strength.

How likely would this policy be to reduce drug spending?
Would Increase Drug Spending
Would Not Affect Drug Spending
Would Minimally Reduce Drug Spending
Would Moderately Reduce Drug Spending
Would Significantly Reduce Drug Spending
Would Substantially Reduce Drug Spending
How likely would this policy be to reduce drug prices?
Would Significantly Increase Drug Prices
Would Moderately Increase Drug Prices
Would Not Affect Drug Prices
Would Moderately Decrease Drug Prices
Would Significantly Decrease Drug Prices
List Prices
Net Prices
How likely would this policy be to increase patient drug access?
Would Significantly Reduce Drug Access
Would Moderately Reduce Drug Access
Would Not Affect Drug Access
Would Moderately Increase Drug Access
Would Significantly Increase Drug Access
Rare Disease
Large Patient Groups
How significant is this policy in the evolution of US drug spending policy?
Does Not Advance Drug Spending Policy
Minimally Advances Drug Spending Policy
Moderately Advances Drug Spending Policy
Significantly Advances Drug Spending Policy
Ground-Breaking Shift in Drug Spending Policy
What are strengths and weakness of this policy?
Size of Affected Population
Evidence Base in Support of Policy
Precedent-Setting Value
Magnitude of Drug Spending Impact
How important are the following in your analysis of the policy's impact?
Not Important
A Little Important
Somewhat Important
Very Important
Unclear which drugs will be imported
Unclear which patients will be able to access imported drugs
Unclear how domestic manufacturers will respond
Unclear how domestic supply chain entities (wholesalers, retailers, etc.) will respond
Unclear how Canadian manufacturers will respond
Unclear how Canadian supply chain entities (wholesalers, retailers, etc.) will respond
Unclear if eligible actors will be administratively able to exercise importation
Exclusion of insulin may affect utility
Unclear that FDA will approve importation proposals
Unclear how payers will be able to participate
Unclear how payers will respond

Considerations for policymakers

Experts highlighted many considerations for policymakers. The most important considerations include whether the FDA will approve states’ importation proposals and whether states and their agents will administratively be able to exercise importation. Other key considerations include uncertainty regarding how U.S. supply chain entities (wholesalers, retailers, etc.), U.S. drug manufacturers, Canadian supply chain entities and Canadian drug manufacturers will respond. Additional considerations include uncertainty over which drugs will be imported and which patients will be able to access them, how the exclusion of insulin from importation eligibility will affect the utility of importation, and uncertainty regarding the response and participation from U.S. insurers and payers.