By: HUB’s EB Compliance Team

Although it was not listed as part of the Trump Administration’s blueprint to reduce prescription drug costs, the Food and Drug Administration (“FDA”) recently announced an action plan for allowing prescription drugs to be imported from Canada and other countries. However, this is just the announcement that proposed rules are coming. While this is a signal of where the FDA thinks it will go, these ideas are not even proposed (let alone final) rules yet.

Two Paths

The action plan describes two paths the FDA intends to propose. They are:

  • Pathway 1: The FDA would allow states, drug wholesalers, and pharmacists to import drugs from Canada. These would be Canadian versions of FDA-approved drugs. This would be a pilot program with an unspecified time limit. In other words, this would get a trial run for a while to see if it works. The FDA action plan lists several controls that would be designed to make sure the drugs are safe and not counterfeit. The FDA anticipates that certain drugs would not be eligible for this pathway, such as controlled substances, biological products, infused drugs, intravenously injected drugs, drugs inhaled during surgery, and certain other parenteral/injectable drugs.
  • Pathway 2: The FDA would allow drug manufacturers to import U.S. versions of drugs they sell in foreign countries. The drugs would be given a new National Drug Code to allow them to be priced differently than the current U.S. version. This was in response to claims by manufacturers that they could not reduce prices on U.S. versions because of contractual obligations in their supply chains.

Takeaways

As HUB often says with proposed developments: this is not final yet. There is no change in the law, so employers will need to wait for proposed and then final rules before making any plan changes.

Notably, employers (other than states) are not listed among the parties that will be eligible for either pathway. Even for states, the proposal is expected to require them to work through a wholesaler or pharmacist to take advantage of Pathway 1. This means most employers will need to rely on their insurers and pharmacy benefit managers to earn any discounts once these proposals are finalized.

Finally, in the current political and regulatory environment, it is reasonable to expect that these rules will be challenged in court. In fact, the FDA anticipates this in the action plan. The action plan says that, if any part of the Pathway 1 rules is invalidated by a court, the proposal will require that all of Pathway 1 be invalidated. Therefore, even if these rules are proposed, and subsequently finalized, they may never become available in any event.

Taking all this into account, employers should keep an eye on these FDA proposals. However, any relief from prescription drug costs that these rules may provide is still a long distance away.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory. For articles specifically addressing prescription drugs, choose “Prescription Drugs” from the “Tag” box at the top of the Compliance Directory.

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.