Prescription Drugs: To Import or Not to Import?

Posted by Tom Penrice on Tue,Jul 12, 2016 @ 06:00 PM

Do cheaper, imported drugs really save money – or just compromise safety?

Considerations regarding benefits and costs of importing prescription drugs into the US. Contact Pennside Partners, a pharma and biotech consulting firm, for more information.50 million Americans did not fill a prescription in 2012 because of its cost, a Commonwealth Fund report revealed.[1] Now, prescription costs are under the political spotlight again, with US presidential candidates Donald Trump, Hillary Clinton and Bernie Sanders all commenting on the issue.  

Speaking out against current Food and Drug Administration (FDA) laws that state it is illegal to import drugs into the USA except in rare cases, the presidential candidates all voiced support for the enhanced importation of prescription drugs to address the issue of cost.

Clinton believes America needs “to promote competition and leverage our nation’s bargaining power to lower drug costs on behalf of Americans”.[2] Sanders wants to allow individuals, pharmacists, and wholesalers to import prescription drugs from licensed Canadian pharmacies.[3] And Trump has proposed removing “barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products”.[4]

But do cheaper, imported drugs really save money – or just compromise safety?

The cost of the FDA

Among the reasons drugs sold in America cost more than in places like Canada or Europe are the approval processes laid out by the FDA. The agency states on its website that it is “illegal for individuals to import drugs into the United States for personal use, because the FDA cannot ensure the safety and effectiveness of these drugs.”[5]

The FDA’s Center for Drug Evaluation and Research (CDER) has the job of evaluating new drugs before they are sold to ensure that brand name and generic drugs work correctly and that the health benefits of the drug outweigh the known risks.

It states on its website: “A team of CDER physicians, statisticians, chemists, pharmacologists, and other scientists reviews the company's data and proposed labeling. If this independent and unbiased review establishes that a drug's health benefits outweigh its known risks, the drug is approved for sale. The center doesn't actually test drugs itself, although it does conduct limited research…”[6]

However, the FDA’s regulatory processes have driven up the cost of prescription drugs to sometimes unaffordable levels – for both consumers and pharmaceutical companies. According to the Tufts Center for the Study of Drug Development, the cost of developing drugs has increased phenomenally since 1975.[7]

Its research shows that in 1975, the pharmaceutical industry spent the equivalent of $100 million researching and developing the average drug approved by the FDA. By 2005, that figure had risen to $1.3 billion. At the same time, the high rate of drug failure (only one in 12 drugs that enter human clinical trials secure FDA approval) means that pharmaceutical companies spend about $5 billion per new drug.

Driving this increase has been the FDA’s regulatory process for Phase III clinical trials. These trials typically represent 90% or more of the cost of developing an individual drug from laboratory to pharmacy, highlights commentator Avik Roy in an article on Forbes.com.

The consequence is higher health spending, he explains, as pharmaceutical companies have to charge more to recoup their costly investments. [8]

The dangers of importation

Some believe that the cost of these regulatory processes is a necessary one. The Philadelphia Inquirer’s Robert Blancato argues that any money-saving notions are too good to be true. In his article he comments: “Drug importation is a terrible idea that would put Americans at risk of harm from impure, unsafe, and counterfeit copies of prescription drugs[9].”

Existing cases support his argument. During the drug importation debate in 2003, the FDA examined mail shipments and found that 88% of the imported drugs they tested did not meet FDA standards, with some packages containing unapproved or counterfeit drugs.[10]

In a speech at that time, former FDA Commissioner Mark McClellan commented: “In addition to allowing in some drugs that might be safe, [drug importation] would also create wide and poorly-regulated channels through which a lot of potentially unsafe drugs will also be able to enter the country more easily.”[11] The FDA website explains that these drugs may be contaminated or contain the wrong or no active ingredient. On the other hand, they could have the right active ingredient, but at the wrong dose. [12] 

Campaign rhetoric or a real solution to pricing problems?

Could loosening the reins on drug importation provide American’s some financial relief? If Americans were able to import from select pharmacies in other countries drug costs would decrease and the FDA could still keep a hand in regulating.

Are the presidential candidates right? Does the question of price outweigh these issues of safety?

In 2013, a group from Maine, consisting of state employees, Portland employees, and one large company, claimed to have saved approximately $10 million over several years by purchasing their drugs through a Canadian mail-order pharmacy. [13]

The same year, the National Health Interview Survey revealed worrying statistics about the affordability of prescription drugs: to save money, almost 8% of U.S. adults did not take their medication as prescribed, and just over 15% asked a doctor for a lower-cost medication.[14]

Based on these statistics, if lack of affordability forces people to avoid taking medication as prescribed, is importation really a dangerous idea? After all, in Canada there are drug checks similar to those carried out by the FDA: Health Canada (HC) regulates drug approvals, claiming that “the safety and wellbeing of Canadians is the paramount concern.”

Cost vs. speed

In Europe, where drugs are also cheaper than in America, there is the European Medicines Agency (EMA), which is responsible for the “protection and promotion of public and animal health, through the evaluation and supervision of medicines.”[15]

There are differences between the bodies, though, providing possible reasons for the discrepancies in cost. Let’s take the question of time: the FDA trumps both the Canadian and European agencies for speed. Research conducted by Yale University’s Joseph Ross revealed that the FDA approved drugs almost two months faster than its counterparts, getting products to market first in the majority of cases.[16]

It took the FDA an average of 322 days to approve a drug product, compared to 366 days for the EMA and 409 days for Health Canada (HC). Perhaps then, America is paying the price of efficiency.

Perhaps it also paying the price of a more concise approvals process. According to an article published in Oncology Journal in 2013, the FDA both scientifically evaluates new agents and issues marketing approval decisions for therapeutics. Meanwhile, the scope of the EMA’s Committee for Medicinal Products for Human Use is limited to the scientific evaluation of therapeutics. The EMA then makes recommendations to the European Commission for marketing approval of the drug.

The article adds that additional differences between the agencies arise because each EU member state has a different system for therapeutics approvals. For example, in Britain, licences can be acquired through the Medicines and Healthcare Products Regulatory Agency (MRHA) or the EMA. The National Institute for Health and Care Excellence (NICE) must then evaluate efficacy and any cost concerns.

In the EU, national authorities are free to set the prices of medicinal products and to designate the treatments they wish to reimburse under their social security systems. At the same time, pricing and reimbursement systems are closely linked to the realization of European policy objectives such as the internal market, pharmaceutical competitiveness, sustainable research and development, and the protection of human health. The variety of healthcare and social security systems in the EU has an impact on the pharmaceutical industry, wholesalers, pharmacists, doctors, health insurers, and patients.[17]

Looking past the election 

For now, cost concerns are still a part of life for many American patients. But as the election campaign heats up, we’ll have to wait and see what lies in store post-November for the future of prescriptions.

 

[1] Collins, Sara R., Ruth Robertson, Tracy Garber, and Michelle Doty. "Insuring the Future: Current Trends in Health Coverage and the Effects of Implementing the Affordable Care Act." The Commonwealth Fund, April 2013. Accessed April 25, 2016.

[2] "Hillary Clinton's Plan for Lowering Prescription Drug Costs." Hillary Clinton's Plan for Lowering Prescription Drug Costs. Accessed April 25, 2016. https://www.hillaryclinton.com/briefing/factsheets/2015/09/21/hillary-clinton-plan-for-lowering-prescription-drug-costs/.

[3] "On the Issues: Fighting to Lower Prescription Drug Prices." Bernie Sanders RSS. Accessed April 25, 2016. https://berniesanders.com/issues/fighting-to-lower-prescription-drug-prices/.

[4] "Healthcare Reform." Make America Great Again! Accessed April 25, 2016. https://www.donaldjtrump.com/positions/healthcare-reform.

[5] "U.S. Food and Drug Administration." Personal Importation. Accessed April 25, 2016. http://www.fda.gov/ForIndustry/ImportProgram/ImportBasics/ucm432661.htm.

[6] "Development & Approval Process (Drugs)." U.S. Food and Drug Administration. Accessed June 09, 2016. http://www.fda.gov/Drugs/DevelopmentApprovalProcess/.

[7] Roy, Avik. "How the FDA Stifles New Cures, Part I: The Rising Cost of Clinical Trials." Forbes. April 24, 2012. Accessed April 29, 2016. http://www.forbes.com/sites/aroy/2012/04/24/how-the-fda-stifles-new-cures-part-i-the-rising-cost-of-clinical-trials/#2d2a18bf5bc6.

[8] Roy, Avik. "How the FDA Stifles New Cures, Part I: The Rising Cost of Clinical Trials." Forbes. April 24, 2012. Accessed May 02, 2016. http://www.forbes.com/sites/aroy/2012/04/24/how-the-fda-stifles-new-cures-part-i-the-rising-cost-of-clinical-trials/#2d2a18bf5bc6.

[9] Blancato, Robert. "Commentary: Drug-import Proposal Would Compromise Safety." Philly-archives. April 07, 2016. Accessed April 25, 2016. http://articles.philly.com/2016-04-07/news/72105577_1_drugs-online-prescription-drugs-fda-associate-commissioner.

[10] Turner, Grace-Marie. "Drug Importation Equals Unsafe Drugs, Mr. Trump." Forbes. March 16, 2016. Accessed April 25, 2016. http://www.forbes.com/sites/gracemarieturner/2016/03/16/drug-importation-equals-unsafe-drugs-mr-trump/#799fd87bd3d3.

[11] McClellan, Mark B. "Speech before Fifth Annual David A. Winston Lecture." FDA U.S. Food and Drug Administration. October 20, 2003. Accessed April 25, 2016. http://www.fda.gov/NewsEvents/Speeches/ucm053609.htm.

[12] "U.S. Food and Drug Administration." Counterfeit Medicine. Accessed April 26, 2016. http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/CounterfeitMedicine/.

[13] Space, Judi. "Is Maine Right About Importing Prescription Drugs?" Is Maine Right About Importing Prescription Drugs? November 23, 2013. Accessed May 02, 2016. http://www.pennside.com/blog-pharma-biotech/bid/326207/Is-Maine-Right-About-Importing-Prescription-Drugs.

[14] Cohen, Robin A., and Maria A. Villarroel. "Strategies Used by Adults to Reduce Their Prescription Drug Costs: United States, 2013." Centers for Disease Control and Prevention. January 29, 2015. Accessed May 02, 2016. http://www.cdc.gov/nchs/products/databriefs/db184.htm

[15] "European Medicines Agency." EUROPA. Accessed June 13, 2016. http://europa.eu/about-eu/agencies/regulatory_agencies_bodies/policy_agencies/ema/index_en.htm.

[16] Gaffney, Alexander. "Researchers: FDA Beats EMA, Health Canada in Drug Approval Times | RAPS." RAPS: Regulatory Affairs Professional Society. June 20, 2012. Accessed May 09, 2016. http://www.raps.org/focus-online/news/news-article-view/article/1798/.

[17] "Pricing and Reimbursement of Medicinal Products." European Commission. Accessed May 19, 2016. http://ec.europa.eu/growth/sectors/healthcare/competitiveness/products-pricing-reimbursement/index_en.htm.


Pennside Partners is a leading pharmaceutical and biotech consulting firm with over 25 years experience. They have offices in the United States, United Kingdom, and Switzerland.

Tags: Prescription Drug Costs, Prescription Drug Importing

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