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Pharmaceutical Market Access and Drug Safety Act – Frequently Asked Questions

 

Why is this bill needed?

Under federal law, pharmaceutical companies are the only ones legally allowed to import prescription drugs approved by the Food and Drug Administration (FDA) into the United States. While drug companies now import more than $40 billion in medicines into our country, U.S.–licensed pharmacists, drug wholesalers and individual consumers are unable to likewise take advantage of the global marketplace.

As a result, American consumers are charged the highest prices in the world for the same medicines that are available in other major, industrialized nations at a fraction of the cost. The Congressional Budget Office estimates the Dorgan–Snowe legislation will save U.S. consumers more than $50 billion over the next decade.

The legislation will allow American consumers, pharmacies and drug wholesalers to import FDA–approved prescription drugs at the substantially lower prices available on the world market.

Who will be eligible to import prescription drugs under this legislation?

Licensed U.S. pharmacies and drug wholesalers that register with the FDA will be able to import prescription drugs for commercial resale. In addition, individual Americans will be allowed to purchase medicines directly from FDA–approved Canadian pharmacies under certain circumstances as described below.

How will American consumers be able to purchase medicines under this legislation?

Individual consumers will be able to purchase prescription medicines from registered Canadian pharmacies for their personal use or the personal use of a family member via mail–order or the Internet. The FDA will be required to make available on its website a list of the Canadian pharmacies that are approved to ship prescription drugs to Americans. Drugs imported by American consumers would have to be in a 90–day supply or less, accompanied by a valid prescription.

The bill maintains the current practice of allowing American consumers to travel to other countries such as Canada and Mexico and return with a 90–day supply of medicine for their personal use.

What prescription drugs can be imported under this legislation?

Only prescription drugs approved by the FDA and made in FDA–inspected plants can be imported. Some prescription medicines that require special handling or storage or that pose special safety concerns could not be exported, such as controlled substances, infused or injected drugs, biologics, drugs inhaled during surgery, or sterile eye drops.

From what countries can medicines be imported?

The bill allows U.S.–licensed pharmacies and drug wholesalers to import FDA–approved medications from Canada, Europe, Australia, New Zealand, and Japan and pass along the savings to their American customers. Individual Americans can purchase medicines from Canada via mail–order or the Internet from Canadian pharmacies registered with the FDA.

What are the safety features of this bill?

The basic approach to assuring the drugs are safe in this bill is to give FDA the ability to verify the drug pedigree back to the manufacturer, to require FDA to inspect frequently, and to require fees to give FDA the resources to do this.

  • For imports by individuals from Canada, the bill requires the exporters in Canada to register with FDA and to post a bond that they will lose if they send unsafe drugs. Frequent inspections by FDA ensure compliance.
  • For commercial imports, American wholesalers and pharmacists must register with FDA and are subject to criminal penalties if they import unsafe drugs. Again, frequent inspections by FDA ensure compliance.

The bill requires manufacturers to inform FDA whether foreign drugs meet FDA standards, and if they don’t, the manufacturers have to give FDA the information necessary to evaluate the safety of the drug. If a foreign drug is manufactured in a plant the FDA has not inspected, FDA can inspect it.

The bottom line is the legislation gives the FDA the authority and resources it needs to safely implement the drug importation program set up under this bill.

When will this legislation take effect?

Importation by individuals from Canada via mail-order or the Internet would be legalized 90 days from enactment. Commercial importation from Canada and from other major industrialized countries in Europe, Switzerland, Australia, New Zealand, and Japan will begin after a year.

Will the Secretary of HHS have to certify the safety of the program before it can be implemented?

Congress has twice enacted into law prescription drug importation legislation that required the Secretary of the Department of Health and Human Services (HHS) first determine that implementation would “pose no additional risk to the public’s health and safety, and result in a significant reduction in the cost of covered products to the American consumer.”

While the experience of Americans with importation from Canada demonstrated that both requirements were met, it is clear that legislation is needed to assure both safety and savings. A certification requirement is merely a poison pill that is designed to be a roadblock to giving Americans access to more affordable prescription drugs.

How do you respond to those who say that drug importation won’t generate much savings?

The Congressional Budget Office recently scored a very similar amendment, which was passed by the Senate Commerce Committee as an amendment to the FTC Reauthorization Act, as reducing total drug spending by $50 billion over 10 years, with $6.1 billion of that in savings to the federal government.

It’s important to note that the CBO found these significant savings even after adjusting for the weakening of the U.S. dollar and assuming that the dollar would remain at the same weak level over the course of its estimate. If the value of the dollar were to strengthen, the actual savings could increase substantially.

How much does the bipartisan bill cost and how would it be paid for?

The Congressional Budget Office recently scored a very similar amendment that Senators Dorgan and Snowe offered to S. 1392, the FTC Reauthorization Act. CBO estimates that it would cost about $500 million annually for the federal government to administer the drug importation program, although this cost would be more than offset by savings to the federal government and American consumers.

The sponsors of this legislation intend for user fees charged to registered importers, Canadian exporters, and drug manufacturers to fully finance the costs of the drug importation system. Therefore, the legislation authorizes the establishment of these user fees and caps the fees at 2.5 percent of the total value of drugs imported annually to the United States in order to ensure that these fees do not become unduly burdensome or cost prohibitive for registered importers and Canadian exporters. Based on the CBO’s estimate, setting the cap at 2.5 percent will fully cover the costs of the program, while still ensuring significant savings to the federal government and American consumers.

Won’t drug companies just prevent drug importation by shutting down the drug supply or by making changes to the drug (such as a change in color or place of manufacture) to render it unapproved?

We know that Pfizer, Glaxo Smith Kline, Eli Lilly and others are already shutting off supply of drugs to those in Canada that export drugs to American consumers. Such tactics will be an unfair and discriminatory practice under our bill, subject to treble damages. Treble damages should deter such behavior by the drug companies.

In addition, the bipartisan bill requires drug companies to tell FDA if the drugs they distribute overseas are the same as or different than the FDA–approved drugs they distribute domestically. Most likely, foreign drugs will be the same, but when they are different or when the drug companies change their foreign drugs to thwart importation, FDA is given the authority to review and approve those differences.

How do you respond to some who say this bill would just import other countries’ price controls?

The Pharmaceutical Market Access and Drug Safety Act merely extends the benefits of free trade to buyers of prescription drugs. Drug manufacturers already benefit from the fact that many of the active ingredients imported into the United States that are used to produce pharmaceuticals enter free of duty. And these ingredients are available at low world market prices. This bill would simply enable American consumers to make the global economy work for them, too.

How do you respond to those who claim that the bipartisan bill contains unconstitutional “forced sales” provisions?

Under the bipartisan bill, if a drug company chooses to sell prescription drugs in a foreign country at the prices in that country, then the company can’t discriminate against firms that import medicines to the U.S. from that country. Such a provision is crucial to ensuring that big drug companies don’t cut off the supply of drugs to pharmacies that are selling to the U.S. However, as the bill language makes clear, nothing in the bipartisan bill compels a drug manufacturer to distribute or sell its drugs in a country.

How do you respond to the claims by the pharmaceutical industry that the bill will cut into the amount they spend on research?

Drug companies must innovate to survive, so it’s hard to see why they would reduce what they do to innovate. Certainly, the drug companies will still have the resources to support research and development (R&D). Only about 20 cents of each prescription drug dollar is spent on research and development, and profits exceed research costs at the top ten U.S. drug companies.

The drug industry also spends a significant portion of their budgets on product promotion. In fact, according to an April 2002 analysis by Public Citizen, Fortune 500 pharmaceutical companies spent nearly three times more on marketing, advertising, and administration than they did on R&D. Yet, the pharmaceutical industry never talks about needing to cut back on drug advertising. In addition, American taxpayers heavily subsidize pharmaceutical research both through the tax code and research at the National Institutes of Health.