Over a year ago, HHS Secretary Alex Azar requested that FDA establish a working group to explore how drug importation “could help address price hikes and supply disruptions.” The FDA working group was not assigned the task of developing a broad drug importation program. Instead, the working group’s remit was specifically limited to considering potential importation of drugs that are (1) off-patent; (2) have no exclusivity remaining; (3) face no generic competition; and (4) can be imported with adequate assurances of safety and effectiveness. Scott Gottlieb’s statement further narrowed the scope of the working group’s task to: “Any policy that involves the importation of drugs would be temporary until adequate competition enters these categories.”
Although there has been little visible sign of the working group’s activity, now the HHS Secretary is facing pressure to approve State drug importation plans that will likely be much broader than the original scope of drug importation that the working group had been asked to consider. These State drug importation plans are likely to be contrary to longstanding HHS and FDA positions opposing such programs based on safety concerns and inadequate cost savings. Moreover, HHS certification of the State plans would need to overcome certain legal barriers that exist under current Federal law.
State laws used to press for federal action
Since 2018, Vermont, Colorado, Florida, and most recently Maine, have passed laws attempting to legalize the importation of prescription drugs from outside the U.S, and 26 other States are considering doing the same. None of these State laws can be implemented unless it complies with Federal law, which imposes numerous restrictions on drug importation, including certification by the HHS Secretary as to safety and cost savings.
No later than July 1, 2019, Vermont’s law required the State to submit a formal request to HHS for certification of its wholesale prescription drug importation program. There is reason to doubt whether Vermont submitted its request within the statutory deadline. In a report to the Vermont Legislature, dated December 31, 2018, Vermont’s Agency of Human Services raised questions about whether Vermont would be able to submit a request for a program that could obtain HHS certification. And none of the three other States that have enacted drug importation legislation have yet submitted their plans to HHS.
However, recent press accounts indicate that the Trump Administration may be considering how to authorize these States to implement their drug importation plans. In May, at an Oval Office meeting with Florida Gov. Ron DeSantis, Trump directed HHS Secretary Alex Azar to support the State’s new drug importation program. A July 2, 2019 Washington Post report quoted an anonymous senior administration official as saying, “[i]nspired by the president’s passion, Secretary Azar has been pushing FDA to go even bigger and broader on importation.”
Contrary to longstanding HHS and FDA positions
Making a major shift on its longstanding positions will not be easy for HHS or FDA because the public record is filled with statements from HHS and FDA officials opposing drug importation. Even recently, the Administration’s May 2018 blueprint to lower drug prices made no mention of importation, and Azar remarked after the blueprint’s release that importing drugs as a solution to high drug prices is a “gimmick [that] has been assessed multiple times by the Congressional Budget Office, and CBO has said it would have no meaningful effect.” Azar said, “[t]he last four FDA commissioners have said there is no effective way to ensure drugs coming from Canada really are coming from Canada, rather than being routed from, say, a counterfeit factory in China.”
Indeed, HHS and FDA heads dating back to 2000 have opposed drug importation, and no HHS Secretary has ever certified a State drug importation plan. In fact, just a few months ago, FDA announced a Warning Letter to CanaRx, a constellation of more than 150 websites that sell unapproved versions of FDA-approved drugs purportedly sourced from Canada, the United Kingdom or Australia.
Potential legal barriers
There are numerous statutory restrictions on drug importation under current Federal law that will significantly constrain the ability of a State to develop a drug importation plan that can be certified by HHS.
A drug importation plan could not take effect unless the HHS Secretary certifies that the implementation of the provision of Federal law that would allow for such drug importation would (1) “pose no additional risk to the public’s health and safety;” and (2) “result in a significant reduction in the cost of covered products to the American consumer.” A certification regarding a State drug importation plan may be vulnerable to legal challenge under both the safety and cost-savings requirements. Regarding safety, the “no additional risk” standard will be difficult for FDA to defend, particularly against a public record filled with almost 20 years of FDA and HHS statements about the additional risks associated with drug importation.
Regarding cost, it may be difficult to show a “significant reduction.” For example, Vermont’s report estimated that savings would be only $1-5 million per year for commercial payers, but did not attempt to estimate how much of that would be passed on to consumers. In addition, these cost-savings did not take into account the State or Federal costs of operating and overseeing a prescription drug importation program, which would likely be substantial. Consequently, the Vermont report cautioned: “A program that costs more to operate than [it] produces in savings is highly unlikely to meet the Secretary’s criteria for certification.” One of the reasons that it is difficult to identify cost savings is that the scope of the Federal drug importation provision excludes from importation some of the most expensive drugs, including “biological products,” “infused” drugs, and “intravenously injected” drugs.
Even if the HHS Secretary were to certify and allow for certain forms of drug importation, there are still limits to which any State plan would need to adhere. FDA would have to issue regulations permitting pharmacists and wholesalers to import prescription drugs from Canada into the U.S. These regulations would have to include requirements to ensure that each prescription imported drug complies with, among other provisions, the requirements for a new drug application under 21 USC 355. But FDA’s recent Warning Letter to CanaRx reflects FDA’s longstanding position that all unapproved foreign versions of FDA-approved drugs are unapproved drugs, in violation of 21 USC 355. Therefore, it remains unclear how any State importation program could comply with the regulations that FDA is required to issue for commercial drug importation.
At a minimum, these regulatory barriers will substantially delay the implementation of any State drug importation program. States will need to develop extensive drug importation plans that justify how they will adequately protect safety and achieve substantial savings. HHS will need to carefully build an administrative record to prepare for litigation if the Department intends to certify any State drug importation plan. In addition, FDA will need to develop the necessary regulations for pharmacist and wholesaler importation, as well as the guidance for case-by-case waivers to allow for individual importation.
We will continue to monitor and analyze the interplay between State and Federal actions regarding drug importation. If you have any questions about drug importation, please contact any of the authors of this blog or the Hogan Lovells lawyer with whom you regularly work.
 See Ouellette v. Mills, 91 F. Supp. 3d 1 (D. Me. 2015) (striking down Maine’s earlier importation law).
 See 21 USC 384.
 21 USC 384(l).
 2018 Vt. Acts & Resolves 133, Vt. Stat. Ann. tit. 18, § 91-4653 (2018).
 21 USC 384(l).
 21 USC 384(a)(3).
 21 USC 384(b).
 21 USC 384(c)(1).