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CBO Says Allowing Reimportation Unlikely To Reduce U.S. Spending on Prescription Drugs

From Kaiser Network

The prescription drug reimportation provisions in the House and Senate Medicare bills (HR 1 and S 1) likely would not reduce medication costs in the United States, according to an analysis of the two bills released July 22 by the Congressional Budget Office, CongressDaily reports. Both provisions would allow reimportation of U.S.-manufactured prescription drugs from Canada.

In its analysis of Medicare reform legislation, CBO did not assume costs or reduced expenditures associated with the reimportation provisions because both require the HHS secretary to certify the safety of reimportation, which the Bush administration "has made clear it has no intention of doing," CongressDaily reports. However, the CBO analysis said that implementation of the reimportation provisions "probably would not produce substantial savings to the federal government" because brand-name pharmaceutical companies "are unlikely to increase their sales in Canada enough to permit a significant share of their United States market to be imported from Canada."

In addition, "Canada's market for prescription drugs is much smaller than that in the United States. If manufacturers were unable to limit the supply of drugs entering the U.S. market from Canada, the likely result would be that brand-name drug prices in Canada would rise much more than the price in the U.S. would decline," the CBO analysis said (Rovner, CongressDaily, 7/23).

Neil Palmer, a Canadian regulatory affairs consultant in Ottawa, said that Canada would not have the volume of prescription drugs to meet increased U.S. demand because the Canadian market "is less than 10% the size of the U.S. market," the Minneapolis Star Tribune reports. In addition, some pharmaceutical industry lobbyists have said that U.S. companies might end the sale of their products to Canadian pharmacies that sell the medications to U.S. residents (Diaz, Minneapolis Star Tribune, 7/24).

Substitute House Bill?

In related news, an agreement between House Speaker Dennis Hastert (R-Ill.) and Rep. Jo Ann Emerson (R-Mo.) might force a "contentious" floor vote this month on a reimportation bill, the Washington Post reports. Under the agreement, Hastert promised the vote to Emerson in exchange for her support of the House Medicare bill (Eilperin, Washington Post, 7/24).

The reimportation bill (HR 2427), co-sponsored by Emerson and Rep. Gil Gutknecht (R-Minn.), would allow U.S. pharmacists to import prescription drugs manufactured in a number of industrialized nations, provided that the medications are manufactured by companies that use counterfeit-resistant technologies and that the companies have registered their production operations with the FDA (Kaiser Daily Health Policy Report, 7/23). The bill does not include a provision that requires the HHS secretary to certify that the imported prescription drugs pose "no additional risk to consumers," the Star Tribune reports (Minneapolis Star Tribune, 7/24).

Under the agreement between Hastert and Emerson, in the event that the House passes the reimportation bill, the legislation would become the position of House conferees in efforts to reconcile the House and Senate Medicare bills, the Post reports. However, House Republican leaders oppose the reimportation bill (Washington Post, 7/24).

Emerson on July 23 proposed a compromise version of the reimportation bill that would only allow reimportation of prescription drugs from Canada over a three-year trial period, the St. Louis Post-Dispatch reports (Blau/Sawyer, St. Louis Post-Dispatch, 7/23). Emerson proposed the amended bill because "the substitute might have a better chance of passing," CongressDaily/AM reports (Rovner, CongressDaily/AM, 7/24). The House Rules Committee planned to address the amended bill last night, but Emerson said that opposition from House leaders "made rejection certain," the Post-Dispatch reports. "They want to put out a bill that will scare as many people as possible," Emerson said. Jessica Incitto, a sp okesperson for Rep. Roy Blunt (R-Mo.), said that Emerson "would get what was promised last month -- but no more," the Post-Dispatch reports. "The original deal struck with Congresswoman Emerson was an up or down vote" on the original bill, Incitto said (St. Louis Post-Dispatch, 7/23).

White House Statement

In a Statement of Administration Policy, the White House on July 23 issued a "strongly worded warning" to the House to not pass the reimportation bill, CongressDaily/AM reports. The bill, on which the House will likely vote today or tomorrow, is "dangerous legislation," according to the SAP. The bill "would expose Americans to greater potential risk of harm from unsafe or ineffective drugs, would be extremely costly to implement, and would overwhelm FDA's already heavily burdened regulatory system," the SAP states.

The White House issued the SAP several days after FDA Commissioner Mark McClellan sent a letter to Rep. Billy Tauzin (R-La.) that highlighted potential safety concerns about the bill (CongressDaily/AM, 7/24). In the letter, McClellan said that anti-counterfeiting technology called for in the bill could cost up to $2 billion, which consumers would have to pay the brunt of, and that a regulatory program to sample incoming drugs called for in the bill could cost the federal government $50 million in the first year.

In addition, McClellan said that the bill could "pose a threat to the security of our nation's drug supply" and allow the importation of medicines that might be an "expired, subpotent, contaminated or counterfeit product; the wrong or contraindicated product; an incorrect dose; or drugs unaccompanied by adequate directions" (Kaiser Daily Health Policy Report, 7/22).

FDA Position

Roll Call on July 24 examines the "unofficial alliance" between the FDA and the pharmaceutical industry in opposition to the reimportation bill. Over the last week, McClellan has spoken with "key" Republicans and Democrats to highlight FDA opposition to the bill, Roll Call reports.

In addition, two officials in the FDA congressional affairs office over the last week have called lawmakers in both parities to voice opposition to the bill, according to Roll Call. "The FDA has longstanding concerns about the importation of drugs and believes that this bill would severely compromise the safety of consumers," a message left by one of the officials said.

Pharmaceutical companies have helped distribute the FDA concerns about the bill to most congressional offices, Roll Call reports (Mullins, Roll Call, 7/24).