The price of prescription drugs in the U.S. compared with those in other countries has been at the forefront of many political discussions.
Numerous studies examining global retail prices report wide disparities, with the U.S. spending more on prescription drugs on a per capita basis than most other countries. Another study found prices in the U.S. were two to four times higher than in Australia, Canada and France.
Many countries limit prices through mechanisms such as centralized price negotiations, cost effectiveness analysis and national formularies, whereas the U.S. refrains from these strategies. This has prompted some state lawmakers to pursue policies to import medicines from other countries.
Before a pharmaceutical can be sold in the U.S., it must go through a rigorous approval process by the Food and Drug Administration and meet stringent safety and efficacy standards. Another layer of protection, the federal Drug Supply Chain Security Act, requires electronic tracing of products as they are distributed in the U.S.
To obtain federal approval for launching an importation program, states must ensure imported drugs are FDA approved and that they meet the agency’s safety standards for importation of finished drugs and active pharmaceutical ingredients. State wholesale drug importation programs would leverage the FDA’s drug manufacturing inspection program and existing pharmaceutical distribution chains to import commercial quantities of select high-cost drugs from other countries, particularly Canada.
The FDA already inspects and approves international drug manufacturing facilities before they can be used to produce drugs for U.S. consumers. Imported drugs would be manufactured in the same FDA-approved facilities and would be repackaged and relabeled by FDA-registered entities to ensure imported drugs match U.S. requirements. Importantly, more than 30 Canadian drug manufacturers are registered with the FDA to produce drugs for U.S. markets, and safety standards in Canada are comparable to those in the U.S. Additionally, federal regulations already ensure the safety of foreign-produced drugs entering the U.S. market.
Because prescription drugs sold in other countries do not go through U.S. procedures, concerns have been raised that importation might lead to counterfeit or substandard products compromising the supply chain. Moreover, lower prices for some drugs may not be possible. The FDA compared the prices of seven of the top-selling generic drugs marketed in both the U.S. and Canada and found prices in the U.S. were lower.
A landmark FDA final rule issued in 2020 permits states, wholesalers and pharmacists seeking to import pharmaceuticals from Canadian sources to submit a Section 804 Importation Program proposal to the federal government. Proposals must outline how a state’s plan would generate savings while not endangering patient safety. However, the rule may encounter several legal and practical hurdles.
Even with support from the U.S. government, importing drugs from Canadian sources faces challenges. One concern is that drug manufacturers sell a specific amount to a country based on how many people may take the drug. If those allocations are redistributed to the U.S., Canada may experience shortages. Finding a Canadian source could prove difficult. Furthermore, critics also suggest that because some high-cost drugs, including biologics and specialty drugs, do not qualify for importation, the impact of these policies may be limited.