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Colorado contemplates importing prescription medications from Canada

Posted at 6:13 PM, Feb 25, 2019
and last updated 2019-02-25 20:40:41-05

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DENVER — As prescription medication costs continue to rise, some states are looking for a solution abroad. In Colorado, a bill to explore the idea of importing name-brand prescription medications from Canada is making its way through the state legislature.

Senate Bill 19-005 already passed its first litmus test, being approved by the Senate Health and Human Services committee. It’s now in the appropriations committee awaiting a hearing.

The idea to import prescription medications is something Governor Jared Polis discussed during his State of the State address.

“Canada has the same drugs from the same manufacturing plants that we have here in the United States — but often at one-half, one-third, yes, even one-quarter of the cost,” Polis said. “The burden that prescription drug costs place on families is simply too crushing for us not to act boldly.”

Under the proposal, Colorado would act as an import wholesaler to bring some of the most expensive medications down from Canada and distribute them to people on private insurance plans, Medicaid and more.

Before any of that can happen, however, the bill tasks the state’s Department of Health Care Policy and Financing and the Medicaid department to study the idea of importing medications and find a way to safely implement the plan, which would require federal approval before it could move forward. Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the program would have to prove that importing the prescription medications will not pose any additional risks to the public’s health and safety. The program must also prove that it would result in significant cost reductions for consumers. However, the law doesn’t quantify what that savings need to be.

Patients First

Supporters of the bill say this is about putting patients first. Senator Robert Rodriguez says he’s seen some instances where the same prescription medication to treat Hepatitis C is sold in Canada for $200 cheaper per pill than in the U.S.

Rodriguez says that for too long states have been waiting for the federal government to try to control the cost of prescription drugs. He says waiting is no longer an option and he believes having a democratic majority in both chambers of the legislature will help propel the bill forward.

“I think everybody should care because I’m sure they’ve seen the struggles of healthcare costs going up, it’s strangling us as a country and I think as legislators we have an opportunity to invest and find solutions,” Rodriguez said.

He’s pushing for the pharmaceutical industry to participate in the conversation of how to lower health care costs.

Another bill co-sponsor, Senator Joann Ginal, said she’d met too many constituents who cannot afford their prescriptions and are making dangerous decisions.

“Too many Coloradans are faced with, ‘Do I pay my rent or do I pay the mortgage or do I get my medication?’ Too many people are opting out of taking their medication. They are putting themselves at risk,” Ginal said.

Ginal hopes that by importing some of the most expensive medication, the pharmaceutical industry will take a closer look at the costs of its drugs and find ways to lower them for American consumers.

“Pharma does good things. It gives us products that help us,” Ginal said. “I’ve seen prices go up continuously but never to this point where they are just going up exponentially. I think that’s a problem. Where does it end?”

The Patient Perspective

Gail deVore has lived with type 1 diabetes for more than 47 years and is dependent on insulin. DeVore says the price of her prescription was between $15-70 per bottle, but she noticed the price start to go up beginning in 1996.

“It has, at this point, become unaffordable for people without insurance,” deVore said.

DeVore now pays $346.99 per bottle that lasts her about 12 days without the help of insurance since she was notified her provider would no longer cover the brand of insulin she takes.

“When the price is this high, either we pay it because of the insurance situation or our insurance pays it, it’s still expensive,” deVore said.

Instead of paying hundreds of dollars for the insulin, deVore decided to start illegally shipping the insulin from a pharmacy in Canada.

“There’s 50 percent more in this box than is in this bottle, and buying it directly through Canada with shipping is $68.25,” she said. “It really is an atrocity that I’m forced to do that.”

DeVore says she doesn’t see herself as a criminal even though she admits she’s breaking the law. She says what she’s doing is making a moral decision to save her own life.

“I’m doing what I have to do to survive,” she said. “If one diabetic dies because they can’t afford insulin, that’s one too many.”

Other patients choose to ration their medications or periodically skip doses to cut down on costs. However, retired pharmacist Ruth Parker says that can have dangerous, long-term health consequences that could end up costing more.

Parker, who spent decades behind the pharmacy counter, says she spent much of her time looking for ways to help patients save money on their medications.

She took an early retirement, blaming the greed of the pharmaceutical industry as a major reason for her decision.

“It was just too much, it was ethically and morally too troubling,” Parker said.

Both Parker and deVore testified in front of the Senate Health and Human Services Committee last month in support of the bill.

DeVore says the bill will introduce competition, bring free trade into Colorado and force the pharmaceutical industry to lower its prices.

However, she doesn’t believe the drug companies are the enemy they’ve been painted to be.

“They’re not completely awful. They make the drug that keeps me alive. The problem I have is the price that they’re charging,” she said.

It’s still unclear at this point which medications would be selected to be imported from Canada if the proposal goes through. However, deVore believes that even if insulin isn't included at first, this could pave the way for lower insulin prices in the future.

Another potential solution to bring the price of prescriptions down is rebates. Right now, the rebates are extended to the pharmacy benefit managers and insurers but don’t always make it to the patient at the point of sale.

Even if they did, deVore says they wouldn’t apply to all patients. More than that, though, deVore called the idea a short-term solution for a long-term illness.

“What do I do next month? What do I do six months from now when the price goes back up,” she said.

The bigger picture

Despite all the arguments in favor of importing prescription medications from Canada, the idea has a number of high-profile critics.

Last May, Health and Human Services Secretary Alex Azar called the idea of importing medication from Canada a gimmick.

“One of the main reasons is that Canada’s drug market is simply too small to bring down prices here,” Azar said. “You can’t improve competition and choice in our drug markets with gimmicks like these—you have to boost competition and price transparency.”

However, Azar has backed off of those comments since then. In July, he directed the Food & Drug Administration to establish a working group to explore the possibility of importing medications in particular instances.

But while Azar’s tone might be changing, other voices are still speaking out against the idea. In 2017, four former FDA commissioners penned a letter to Congress saying importing drugs is not a safe solution to the price problem.

“We believe that such importation represents a complex and risky approach—one that the evidence shows will not achieve the aim, and that is likely to harm patients and consumers and compromise the carefully constructed system that guards the safety of our nation’s medical products,” the letter reads.

One of Canada’s former health ministers has also spoken out against the idea, saying the country cannot be held responsible for ensuring the safety of quality of medications exported to the U.S.

In an opinion piece published in the Washington Post in 2017, Leona Aglukkaq said Canada does not have the resources to inspect every shipment of medication coming to the U.S. to make sure they don’t contain adulterated, counterfeit or illegal drugs. She also commented that the demand for drugs could cause a shortage in Canadian borders and causing prices to skyrocket.

The case against importation

Dana Malick is the Senior Director of state police for the rocky mountain region of Pharmaceutical Research and Manufacturers of America (PhRMA). She says the question the bill is asking about prices is the right one. However, she also believes importation is a dangerous idea.

“The concern that PhRMA, along with a lot of other entities, has is whether or not this is a safe approach,” Malick said.

First, Malick says a state-run importation program would be illegal under federal law due to the 2013 Drug Supply Chain Security Act. This law requires drugs shipped in the U.S. to have a bar code which can trace it from the moment it was manufactured to the day a patient picks it up from the pharmacy by 2023. However, that might not be the case if the medications came from Canada

“Those drugs actually cannot become compliant with our current track and trace system in the U.S.,” she said. “No supplier licensed in Colorado would legally be able to distribute these drugs because of the requirements under the U.S. track and trace system.”

Beyond that, Malick says there’s no guarantee that the drugs that are shipped from Canada would be manufactured there.

“It jeopardizes the integrity of our gold standard supply chain,” she said. “It would certainly make the citizens of Colorado and the rest of the country more vulnerable to taking drugs that are adulterated and unsafe.”

Another criticism Malick and opponents of the bill have raised is: who would ultimately be held liable and how if a patient gets sick from tainted medication?

She also argues that the program would cost $2.7 million just to find out whether it’s even feasible to import medications to Colorado without any guarantees of results.

A study in Vermont has already found that the idea wouldn’t result in any cost savings to Medicaid patients since they are already getting the best price for prescriptions.

There’s a reason prescription prices are more expensive in the U.S. than in other countries. The U.S. has a system of incentives, where the higher the list price, the more money the supply chain makes along the way. The more drugs cost, the more pharmacy benefit managers an insurers can make. These groups are often offered rebates or discounts to bring down the cost of drugs, however that savings doesn’t always make its way to the consumer, according to Malick.

“Explaining the supply chain is a really complicated thing you can’t just do it in a couple of bullet points,” she said.

Keeping those incentives in place is important to encourage investment in the pharmaceutical industry. Malick said importing medications could stifle research and innovation since pharmaceutical companies would potentially be making less money.

It’s not cheap to create a new medication. Professional estimates put the cost of creating a new drug from its conception to the moment it’s sold between $2 and $2.6 billion before any profit is realized.

The odds of a drug becoming a reality are also very low. Only one in about 40, sometimes less, actually make it to the marketplace.

“It’s important that there be the right incentives in place for companies to continue,” Malick said.

Instead, she believes creating rebates that save patients money is a solution that could happen much more quickly and safely.

“Requiring manufacturer rebates and discounts that would go to pharmacy benefit managers and insurers and requiring that at least some of those go to the patient at point of sale will help lower their costs when they go to the pharmacy counter right away,” Malick said.

Vermont’s Vision

Other states are also considering a similar move as Colorado with bills to import medications.

Only one state, however, has actually approved legislation to move forward with the idea. Vermont passed a bill last year to look into implementing an importation program of its own and has been studying the idea ever since.

“What we have set into motion is a program through which we would import pharmaceuticals through safe, well established mechanisms,” said Vermont state Senator Tim Ashe.

The state is considering importing 17 of the most expensive, name brand medications from Canada. The state is now in the process of designing a program that has the proper safeguards in place to lower costs and protect the health and safety of consumers. Once that happens, the state will present the program to the federal government for its final approval.

Senator Ashe says he’s heard all of the criticism about the proposal before, from the potential of importing tainted drugs to people getting sick, but he believes those are all red herrings.

Vermont borders Canada, and he knows of some patients that choose to drive over the border to buy their medications at a discounted price.

“We’re still looking for one person who has purchased drugs illegally in Canada and has been made sick or some other malady and it just hasn’t happened,” Senator Ashe said.

Senator Ashe admits that it would not likely save Medicaid patients money. Instead, commercial insurance plans would see the biggest cost savings and Vermont’s program is still a ways out from becoming a reality. Senator Ashe believes it’s unlikely that the program would get the green light from the government before the beginning of next year. After that, it would take at least two years to implement.
“There are still some unknowns about how we’re going to move forward in Vermont. We still have to design the detailed level program to make this work,” Senator Ashe said.

Still, he believes the plan is a good idea.

“The dollar savings are very real,” he said.

Other states like Colorado, Oklahoma and Oregon are keeping a close eye on how Vermont moves forward with its proposal. Some are reaching out to exchange ideas.

“States are fed up. Congress is pretty much a wholly-owned subsidiary of big pharma but states are not,” Senator Ashe said. “The thing that will force Congress to take action is when states like Colorado step up and say they’ve had it, they can’t wait for Congress to solve this problem anymore and they’re going to do something about it.”

He believes that the more states that come together to demand change, the higher the probability that something will be done to lower the costs of medications across the country.

SB19-005 is now awaiting a hearing in the appropriations committee in Colorado.