American healthcare is an overwhelmingly contentious issue. In short, America is not as comfortable with raising taxes to accommodate others in the same way as Europe.
Consequently, the drug companies reward American consumers by providing life-saving medication that is not globally available – at least until further down the product’s life cycle. For example, 45 approved new cancer drugs were covered by Medicare in comparison to just 13 in Canada.
As a result, Americans spend an average of $1,200 per person per year on prescription drugs. This is a figure that is often thrown around on both sides of the political spectrum as completely unacceptable. So, as part of Trump’s most recent initiative to help support those seeking assistance for medical costs, the administration is exploring ways to allow individuals to import cheaper drugs from Canada.
To help clarify what this means for you as a citizen and healthcare consumer, we are discussing the implications of cheaper prescriptions and how they can benefit you here.
Why are drugs from Canada cheaper
It is less that Canada offers cheaper medication, but that the US government does not directly regulate the price of medicine. Drug companies in the US are able to set the price they deem suitable for their products – providing the market can sustain it. Trump has accused these drug makers of “getting away with murder” previously and has promised to routinely investigate how these prices are set during campaign promises.
In Canada, however, drug prices are set (to a certain extent) by a federal body. Their role is to provide a ceiling for prices of patented drugs (generic drugs are not capped) – a ceiling that is determined through a comparison of seven industrialized countries. To illustrate the difference this makes, one in five US adults have admitted to failing an entire prescribed course of medication simply because of cost. This figure falls to one in ten in Canada.
Products like insulin, necessary for sufferers of diabetes, are sold in Canada for approximately a tenth of the cost inflicted on American citizens. This is not unique to Canada though; the NHS in the UK has regularly refused to purchase from American big pharma companies, often citing price as the reason why. One such example of a rejected purchase was of a cystic fibrosis drug that could save the lives of thousands of children, costing £105,000 per patient per year.
What is stopping it from happening now?
For any medication to be sold in the US, it must first be approved by the Food and Drug Administration (FDA). According to legislation, the FDA must deem the medicine as safe and effective during a lengthy inspection. However, any international medication produced by other countries – even if they are identical to US versions – are currently considered unapproved medicine.
Pharmaceutical companies are unhappy about this importation. They argue that it would allow counterfeit and dangerous medication to flood US markets. In addition, as only Canada has been named a chief importer, there is the objection that their drug market is too small to lower prices in America. Secretary of Health and Human Services Alex Azar, who is now leading the initiative, has previously described drug importation as a “gimmick” for this reason.
The Canadian Pharmacists Association(CPA) promptly announced their concern by explaining that drug importation could damage the internal supply of Canadian prescriptions. The majority of Canadian medication is imported, and the CPA believes that there could be a very real threat to Canadian patients attempting to access medicine should America begin purchasing Canadian medication en masse.
What is Trump’s suggestion?
In spite of these concerns, Trump is proposing that Section 804 of the Federal Food, Drug and Cosmetic Act be invoked. By doing so, the Secretary Azar is authorized to approve the importation of Canadian drugs despite not being given the FDA’s seal of approval. Azar would then be able to weigh up whether this decision would offer significant benefit to consumers or jeopardize public health.
Specifically, the drugs that would be imported into America would need to be Canadian variants of FDA-approved American drugs. Once Azar agrees, US states, wholesalers and pharmacists could submit plans for importing the drugs to the Department of Health and Human Services.
This would not apply to all medication. Expensive drugs such as biologics (used to treat certain cancers, Crohn’s disease and diabetes, among other conditions) would not be imported – and neither would insulin for that matter. In addition, there would be scope for US drug companies to bring foreign versions of their own drugs to the US with cheaper pricing. However, there would be little incentive to do so.
What does this mean for American consumers?
Truthfully, very little right now. It is incredibly difficult for legislators to tie together all of the moving parts necessary in achieving importation. Pharma companies are not motivated to lower their prices and the Trump administration has already been accused of ham-fistedly attempting to deliver on a campaign promise.
It was only in July 2019 that the Trump administration had scrapped plans to ban rebates that drug companies pay pharmacy benefit managers. This is just three days after a federal judge refused a ruling that would have forced pharma companies to disclose list prices of their drugs in television advertisements.
In other words, it could take years before importation begins. However, having said that, this is the most discussion that has taken place in regard to importation and lower prices for American citizens. In addition, should any medication be imported pharma companies would need to drop their prices in order to compete.