One city begins reimporting drugs while congress mulls nationwide permission - Springfield, MA

Drug Cost Management Report, August 8, 2003

Congress continues to debate whether importing foreign drugs should be allowable as a method of controlling drug costs because of the safety risks involved. But Springfield, MA, isn't waiting for a federal nod to drug importation and instead has launched its own program that's designed to work under current law. "Springfield Meds," purportedly the first Canada drug importation program to be officially sponsored by a local government, will be watched closely by other municipalities seeking ways to reduce their health care bills.

City Insurance Program Director Christopher Collins says that Springfield's Employees Insurance Advisory Committee, an entity that has oversight of public employee insurance plans, spent six to eight months exploring ways to reduce health care spending. "They talked about how to do it, and this is what they came up with," he says.

Public employees and their dependents as well as city retirees can opt to enroll in Springfield Meds. Detroit-based CanaRx Services, Inc. will administer the program, which allows members to reimport long-term "maintenance" prescription medications via mail order from Canada at prices between 20% and 80% lower than they can obtain in the United States, according to Collins.

"In the vast majority of cases, medications would arrive in a container that was sealed by the original manufacturer," he explains, so that the drugs would have gone from the manufacturer to a licensed Canadian pharmacy to a Springfield Meds member's mailbox. "Only FDA-approved medications are allowed to be sent," Collins asserts.

He notes that Springfield spends "in excess of $18 million" a year for prescription benefits under its self-funded insurance plan for public employees. Last year, he says, the total was just under $18.5 million. Depending on how many of the plan's approximately 20,000 beneficiaries signed up for Springfield Meds, city officials forecast savings from the program of between $4 million and $9 million annually, according to Collins. He adds that 300 joined last month, including Mayor Michael Albano. The program took effect July 8.

House Throws Down Gauntlet

Meanwhile, the U.S. House of Representatives on July 25 passed H.R.2427, the Pharmaceutical Market Access Act of 2003, which would allow importation of prescription drugs from Canada and other countries for use by U.S. consumers. The bill echoes provisions in both versions of the Medicare reform bill. Despite its comfortable 243-186 margin in the House, H.R. 2427 faces strong opposition by the Bush administration and Senators.

That's because unlike the Medicare bills, H.R.2427 seeks to strike from the existing Federal Food, Drug and Cosmetic Act a requirement that the secretary of HHS first must guarantee the safety of a foreign drug importation scheme. The current secretary, Tommy Thompson, has said that at present he cannot do so. This roadblock has served to deflate any would-be potential impact of Canada drug importation in other legislative efforts, since the importation mechanisms called for prior to those in H.R.2427 could be delayed indefinitely without Thompson's approval.

FDA Not Prepared to Take On Oversight

The Bush administration in a July 23 policy statement said it strongly opposes the bill, saying it would expose Americans to greater potential risk of harm from unsafe or ineffective drugs, would be extremely costly to implement, and would overwhelm FDA's already heavily burdened regulatory system.

Under H.R.2427, drugs could be imported "only if the drugs and the facilities where they are manufactured are approved by the [U.S.] Food and Drug Administration." But William Hubbard, FDA associate commissioner for policy and development, testified at a June 24 hearing that "FDA cannot assure the American public that drugs imported from foreign countries are the same as products approved by FDA."

Not only would patients be "at greater risk because there is no certainty about what they are getting," he said, but "if a consumer has an adverse drug reaction or any other problem, the consumer may have little or no recourse." The agency warns that seemingly legitimate imported drugs can be expired, subpotent, contaminated or counterfeit product, the wrong or a contraindicated product or other problems.

In a letter sent to Medicare conferee Rep. Billy Tauzin (R-LA), FDA Commissioner Mark McClellan, M.D., concedes that a provision in H.R.2427 requiring anti-counterfeit technology be included in the packaging of drugs could be useful in helping to ensure safety.

However, the cost of anti-counterfeiting technology called for in H.R.2427 "is substantial and could raise the cost of prescription drugs by as much as $2 billion in the first year," McClellan contends. But that amount pales in comparison to savings claimed possible by the bill, which asserts that "allowing open pharmaceutical markets could save American consumers at least $635 billion of their own money each year."

Call Collins at (413) 787-6001 or FDA's Crystal Rice at (301) 827-1673.