US Drug Importation: Hard To See Path Forward, Former HHS Adviser Says
Executive Summary
Former drug pricing advisor John O’Brien discusses next steps for Administration policies around importation and international reference pricing during a speech to the Academy of Managed Care Pharmacy.
The path to implementing a prescription drug importation program in the US is so filled with obstacles that in the end, the main impact of the policy may be the message that the White House is open to considering it, former Health and Human Services Department senior advisor for drug pricing John O’Brien suggests.
HHS released an “action plan” outlining a possible regulatory approach to allowing lower-cost drugs to be imported into the US in July. (Also see "Canadian Importation Option May Be Hindered By Product, Savings Restrictions" - Pink Sheet, 31 Jul, 2019.) Since then, the state of Florida submitted an importation proposal to HHS for approval and President Trump has hinted that the department will respond favorably. (Also see "Trump Pushes Importation, Claims Success In Lowering Prices" - Pink Sheet, 3 Oct, 2019.)
Nevertheless, “I can’t see a path forward on importation because of the supply chain issues,” O’Brien told the Academy of Managed Care Pharmacy Nexus 2019 meeting on 31 October. Given all the potential pitfalls, “I wouldn’t be starting an importation business,” he quipped. O’Brien left HHS in August after two and a half years at the department.
States will need a process to ensure the drugs being imported are safe and that’s challenging, he emphasized. “How do you know it can be done safely and effectively if you don’t ask, ‘Where are you getting this stuff from?’ O’Brien pointed out.
“When you say, Vermont, that you are vetting wholesalers in the US and Canada, how do you know what those wholesalers are going to do? What is their process? You could envision rulemaking asking that question.”
“Ending foreign free-loading is a bone the President never put down… It’s too easy for him, too easy for voters, too easy for everybody to understand that other countries are getting much better deals on the same drug than we are.”
O’Brien also predicted difficulties with the other importation “pathway” in the HHS action plan. It would allow manufacturers to import and obtain a new national drug code (NDC) for their own products to enable them to offer lower-cost versions of their drugs in the US. (Also see "HHS Importation Plan Builds On Use Of Authorized Generics To Lower US List Prices" - Pink Sheet, 31 Jul, 2019.))
“I think it’s only a matter of time for some drug company lawyers to say, ‘Wait a minute, why can’t we just ask for a new NDC for the products we have here? Could that lead to re-entering negotiations with our payers so that now we can get out of our existing contracts?” he noted.
But that situation, where high-cost, highly rebated drugs coexist with lower-cost, non-discounted drugs could lead to confusion and frustration for patients because payers may prefer the version with rebates, O’Brien pointed out.
Finally, he said, the Canadian market will not be able to supply enough lower-cost drugs to make a meaningful difference. “If you don’t change the Clayton Act and essentially force companies to sell as much product to Canada as the government thinks they should, you’re never going to have the supply internationally to support the parallel trade that people believe will lower costs.”
An 'Open' Attitude Toward Importation
The message that importation is possible may be more important than actual implementation, he implied. What “many governors and the President want to do…is be open to importation,” O’Brien explained. And “we’ve been bold enough this time to not only say we want to import drugs but we want to import prices too.”
O’Brien also addressed prospects for Administration action on international reference pricing as a way to lower drug costs. A proposed rule implementing a demonstration that would use an international price benchmark to limit prices for Medicare Part B drugs has been pending at the Office of Management and Budget since June.
There is a “very high probability that a proposed rule comes out,” O’Brien predicted. For one thing, it is already written, he explained. For another, President Trump has promised action on the issue, although he described the approach that will be taken as a “most favored nation” policy. (Also see "White House Exec Order Will Bring US Parity With Lowest Drug Prices Abroad, Trump Says" - Pink Sheet, 5 Jul, 2019.)
“If something doesn’t happen around this topic, the people who are responsible for doing that are going to run into a very frustrated President,” O’Brien observed. Ultimately, “ending foreign free-loading is a bone the President never put down.”
“Some are saying, if you want their prices, why don’t you have the guts to do your own health technology assessments?”
“At the end of the day, it’s too easy for him, too easy for voters, too easy for everybody to understand that other countries are getting much better deals on the same drug than we are. … That’s why this topic won’t go away.”
The “biggest question isn’t whether there is going to be an IPI proposed rule, it’s is it going to be IPI or ‘most favored nation,’" he commented. Will it be "an average [price] or is it going to be the lowest price?”
O’Brien did not forecast whether the policy would ever be implemented. However, he pointed out that the momentum behind international reference pricing should lead to some “important conversations” among policy makers in this country.
Health Technology Assessments In The US
“I think our country has to have an honest conversation about am I really selling my drug overseas at a marginal price because I can or because I have to,” O’Brien maintained. “Are we importing foreign price controls or are we subsidizing foreign price controls with the high prices we pay here?”
Some of the more "sophisticated models” abroad base pricing decisions on health technology assessments by government-supported organizations, he pointed out. And “some are saying, if you want their prices, why don’t you have the guts to do your own health technology assessments” in the US?
O’Brien cautioned that establishment of a central government-run health technology assessment body in the US is probably a bad idea. “I think it has the potential to become very political very fast,” he said. He also warned that the HTA process should not “provide a political fig leaf for a spending cut.”
Some stakeholders have suggested that HTAs conducted by the Institute for Clinical and Economic Review could serve as a standard in the US. (Also see "ICER Value Assessments Could Provide US Standard, Payers, Providers Tell HHS" - Pink Sheet, 2 Aug, 2018.) However, other policy experts, such as former FDA Commissioner Scott Gottlieb, have argued it would be preferable to have a competitive marketplace with multiple HTA organizations in the US rather than just one.