It’s been a while since we talked about drug reimportation here, but it’s been back in the news recently. Drug prices are, naturally, of economic, medical, and political importance, and the administration has been making a great deal of noise about lowering them. To that end, HHS Secretary Alex Azar has announced the formation of a working group to look into drug reimportation in some circumstances.
This gets complicated, since there are several situations where drug prices go up. The most egregious examples usually come when someone deliberately games the system on an old generic drug, as in a Martin Shkreli-style “closed distribution” plan that can insulate them from further generic competition. The FDA itself seems to be taking some action on this. Other price hikes have come about as side effects of deliberate FDA policies, such as the awarding of market exclusivity for running new trials on old drugs that were never approved under the modern framework. And then there are the price hikes on drugs that are still under patent, where one manufacturer has the exclusivity until that patent expires. As a side note, I have watched Congressional hearings – or tried to – on these problems, only to feel actual physical pain at the degree to which the different issues are mixed, misrepresented, or just plain misunderstood by some elected officials. I would be very interested in the result of a live, face-to-face survey of all the member of the House and Senate, asking them to briefly explain the difference between a patented drug and a generic drug, for example. But that’s a topic for another day.
So it’s not clear to me which of these things reimportation is being explored as a solution for – but it looks like it’s aimed at the first two above, though. Which doesn’t do much about drug prices in general. Steve Usdin at Biocentury is even less impressed than I am:
The drug importation policy announced by Alex Azar last week is a political stunt, aimed at generating headlines at a time when the HHS secretary seems desperate to demonstrate to Donald Trump and the media that he’s fulfilling the president’s pledges to lower drug prices.
In fact, as Azar knows, importation will have a negligible effect on access to drugs.
Opening the door to importation as a price control tactic will, however, create precedents that will damage FDA, and consequently hurt biomedical innovators and patients.
The new policy would allow importation of drugs that lack patent protection or exclusivity, and that are produced by one manufacturer.
Azar indicated in a July 19 interview with Fox News that the move was his idea, and that he expects FDA to fall into line behind it. The HHS secretary said he called FDA Commissioner Scott Gottlieb to demand establishment of a working group on importation, telling him: “I insist that you find a pathway to make this happen.”
The record shows both Azar and Gottlieb know that importation won’t move the needle when it comes to drug prices.
Speaking to reporters in May, Azar dismissed drug importation as a “gimmick,” arguing that even if it could be done safely, drug companies would respond by limiting supplies to countries that were exporting to the U.S.
In March 2016, Gottlieb wrote that presidential candidate Trump’s endorsement of importation was “good politics” but that it would “offer consumers little relief.” The cost of ensuring the safety of imported drugs would eat up any savings, he wrote.
This sounds like the way politics works, all right, and most especially in the current administration. To be fair, everyone wants to make sure that their boss thinks that they’re doing a great job implementing the boss’s great ideas so that the boss looks great, but we seem to have turned up the volume on that stuff even more.
Usdin’s worry – and it’s definitely a serious one – is that if you get the FDA involved in drug pricing in this way, then there’s no place to draw the line. The agency is fundamentally in charge of judging efficacy and safety, and these are very different things than price. I think that the regulatory framework should be set up in general to allow competition on price (which is why I object to the generic drug situations mentioned above). But once the government starts deciding that “Ya know, the price of Drug X is just too damn high”, then you’ve stepped off into picking financial winners and losers, walking through the landscape with your magic wand and bestowing favors as you see fit. This system would absolutely be a moral hazard.
And unless you go for high-volume patented drugs in this manner, the reimportation idea isn’t going to do much, anyway. Drugs like Daraprim get huge headlines when a Shkreli rams up their prices, but the insurance companies hardly even notice. Which is why he can do it. The amount of money that will make a tiny company rich off a tiny drug is just a roundoff error on the big spreadsheet of costs. So we could be setting a dangerous, tempting, easily abused precedent for. . .hardly any effect at all in the present, except the chance to strut and preen in front of the cameras. Not a good plan.