9 December 2020

No! (from) Canada

We've heard politicians advocate importing "cheaper" prescription medical products from Canada for years.
United States Food, Drugs, Healthcare, Life Sciences
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We've heard politicians advocate importing "cheaper" prescription medical products from Canada for years.  We've always thought the idea was ludicrous.  As we said, a little more than two years ago:

Think about it.  California alone has a greater population than Canada.  Any large-scale importation of cheaper Canadian drugs to the United States would almost immediately cause shortages in Canada.  Given the current tit for tat, we would expect Canada to react by slapping an export tariff on prescription drugs to force United States consumers to continue paying for the inefficiencies in our health care delivery system.

Well, if there's a ludicrous idea out there, we can count on the current administration to pursue it – and they did.  Bypassing Congress altogether (as is his wont), the current occupant of the White House issued an Executive Order on July 24 that purported to pave the way for unlimited imports of prescription drugs from Canadian sources:

The Secretary of Health and Human Services shall, as appropriate and consistent with applicable law, take action to expand safe access to lower-cost imported prescription drugs by . . . completing the rulemaking process regarding the proposed rule . . . to allow importation of certain prescription drugs from Canada.

Executive Order on Increasing Drug Importation to Lower Prices for American Patients §2(c) ( available here, at least until January 20, 2021).

This Executive Order didn't really do anything except order the completion of an administrative rulemaking process that was already underway.  On October 1, 2020, the FDA dutifully issued a final rule creating a Canadian drug importation system:

SUMMARY: The Secretary of Health and Human Services (Secretary) is issuing a final rule to implement a provision of the Federal Food, Drug, and Cosmetic Act (FD&C Act) to allow importation of certain prescription drugs from Canada. . . .  The final rule contains all requirements necessary for a sponsor to demonstrate that their importation program will pose no additional risk to the public's health and safety.  In addition, the final rule requires that the sponsor explain how they will ensure their program will result in a significant reduction in the cost of covered products to the American consumer.

Importation of Prescription Drugs, 85 Fed. Reg. 62094, 62094 (FDA Oct. 1, 2020).  This final rule was to go into effect on November 30, 2020 – that is to say, after the American election.

Sure enough, it was smoke and mirrors.  Just as we knew they had to – to protect their own drug market – the Canadians put the kibosh on it.  On Friday, November 27, the Canadian Ministry of Health acted, as they put it, "to deal with a significant risk to health."  Interim Order Respecting Drug Shortages (Safeguarding the Drug Supply), available here, at first paragraph.  Canada acted for the exact reason we predicted, to prevent the United States from gobbling up Canadian drugs and creating shortages in Canada.  Hence, the "Prohibition":

2          A person that holds an establishment licence must not distribute a drug to another person for consumption or use outside Canada unless the person holding the licence has reasonable grounds to believe that the distribution will not cause or exacerbate a shortage of the drug.

For the current list of Canadian drug shortages, see here.  Further, any such "reasonable grounds" for ignoring the "prohibition" must be documented"

3          If a person that holds an establishment licence distributes a drug to another person for consumption or use outside Canada, the person holding the licence must immediately create — and retain — a detailed record of the information that they relied on to determine that the distribution of the drug is not prohibited by section 2.

The Canadian government can demand this information whenever it sees fit and the licenced entity has 24 hours to respond.  Id. at at §4.

For news coverage of the Canadian action, see:

"Canada bans mass exports of prescription drugs."

" Canada to Trump: You can't take our prescription drugs."

" Canada blocks some bulk prescription drug exports to U.S. to prevent shortages."

" Canada warns U.S. against drug import plans, citing shortage concerns."

At best, the notion of importing "cheaper" Canadian drugs was a pipe dream – at worst it was a smoke screen – and in either case it was a distraction to avoid grappling with the inefficiencies of this country's domestic healthcare system.  A country with a market the size of the United States cannot reasonably expect to lower prices through importation.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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