Precautionary Considerations for Pharmacy Tourism

By Barbara Hawes

Frequently billed by proponents as an ideal way to get around the sky-high prices of specialty drugs, pharmacy tourism is actually a journey that’s fraught with risks –from compliance and legal issues to practical concerns, too.

This brand of tourism’s allure has grown as more specialty pharmaceuticals come to market, prolonging and saving lives but at budget-breaking costs. Even though they account for less than 2% of all U.S. outpatient prescriptions, nine of the ten top-selling drugs are expected to be specialty this year, and they will comprise almost half of pharmacy revenue.

Pharmacy tourism is based on accessing lower drug costs outside of the U.S. For example, a weekly dose of 50 mg of Enbrel for rheumatoid arthritis runs $1,300 in the U.S. In Mexico, that same dosage costs about $650, for savings of over $9,000 for a 12-week supply.

Utah thinks enough of the idea that under its 2018 “Right to Shop” bill, its Public Employee Health Plan (PEHP) launched a voluntary Pharmacy Tourism Program. It was expected to save about $1 million by the end of 2019. Under the program, participating plan members with the costliest prescriptions are flown with a companion to San Diego and from there to Tijuana. At a partner hospital there, they see a doctor who checks their medical history and rewrites their prescriptions for a 90-day supply. The next stop is a vetted pharmacy that is aligned with the program.

But is it legal?

Concerns over pharmaceutical drug importation relate to our stringent levels of quality control over distribution, storage and inspection. When pharmaceuticals are made in the U.S., shipped elsewhere, and then reimported to the U.S., have they been diluted? Are they counterfeit? Were they stored in the right conditions?

A 1998 U.S. Food & Drug Administration (FDA) “non-enforcement” policy recognized extenuating circumstances for importing prescription drugs from outside the U.S., and that’s been the basis for pharmacy tourism. Under the policy, people aren’t penalized if there is no FDA-approved treatment for the condition they were treated for and are bringing home from overseas. Nor will they be penalized if the medication was prescribed when they were traveling outside the U.S. Only a 90-day supply is allowed and it can’t be re-sold.

However, the FDA also states: “...this policy is not intended to allow importation of foreign versions of drugs that are approved in the U.S.,” suggesting that, non-enforcement policy or not, the federal government considers it illegal to import FDA-approved drugs.

While some states are moving to make the reimportation of certain pharmaceutical drugs in this manner legal, that doesn’t negate the fact that it’s illegal at the federal level. Thus, ERISA plans looking to participate must step carefully. Under ERISA, employers and plan fiduciaries must follow all applicable laws. Calling the pharmaceutical import program voluntary and thus, outside the plan, might play unless the employer pays for or facilitates the pharma tourism intermediary service that runs the program. In that case, the program probably would be considered part of the plan or a separate ERISA plan.

In addition to legal and compliance issues, plan sponsors should also think about savings considerations. One is their potential forfeiture of drug manufacturers’ rebates and patient assistance programs. Even more problematic, self-funded plans need to make sure their stop loss carriers will cover claims related to the drugs in these programs. Finally, prescriptions filled outside the country will be absent/outside the U.S. patient history file and unavailable for drug-drug interactions and other critical clinical evaluations.

Other considerations? Pharmacy tourism can sound exotic, but ailing patients may find those quarterly trips wearing after a time. Still others may not be fit for travel due to complex conditions. Weather may restrict travel during certain times of year, forcing patients to get costly short-term supplies at home in the interim. And, if these programs really take off, will the host countries have enough supply to meet demand or will we all end up back where we started?

HUB International’s team of Employee Benefits consultants, including members of its Pharmacy Practice and compliance organization, are available to help you manage the issues facing today’s benefits programs.