Americans spend an average of about $1,200 per person, per year on prescription drugs, more than anywhere else in the world. Lowering those costs is one of the few topics uniting U.S. leaders from both the Democratic and Republican parties. The Trump administration’s latest proposal is to import cheaper drugs from Canada.
1. Why are drugs cheaper in Canada?
Unlike many other nations, the U.S. government doesn’t directly regulate the price of medicine. Drug companies in the U.S have the power to set the price they choose as long as the market will bear it. In Canada, a federal body sets a price ceiling for patented drugs based on a comparison of prices in seven industrialized countries. Prices for generic drugs aren’t capped and are often higher than in the U.S.
2. How does the U.S. regulate drug imports?
To be sold in the U.S., drugs must be approved by the Food and Drug Administration as safe and effective, and the facility where they’re manufactured must pass FDA inspection. Drugs sold in other countries, even if they’re identical to U.S. versions, are considered unapproved medicine.
3. How would Trump’s plan change that?
It would invoke Section 804 of the Federal Food, Drug and Cosmetic Act, under which the Secretary of Health and Human Services is authorized to allow the importation from Canada of drugs that haven’t been given the FDA’s seal of approval. The secretary can do so if he or she certifies that the program wouldn’t jeopardize public health and would offer “significant” cost reductions to consumers.
4. How would it work?
The imports would be Canadian versions of drugs acknowledged by the FDA as safe and effective. U.S. states, wholesalers and pharmacists could submit plans for importing the drugs to the Department of Health and Human Services, which would ensure the drugs are manufactured in line with FDA standards. Because the U.S. would ultimately be relying on Canada’s regulatory process rather than FDA scrutiny, some U.S. pharmaceutical executives argue that the proposal could put American patients at risk.
5. Which drugs would this apply to?
For states, wholesalers and pharmacists, the plan wouldn’t apply to expensive drugs such as biologics. Current laws prevent importation of these drugs, including insulin. Under a second pathway outlined in the government’s plan, U.S. drug companies could bring foreign versions of their own drugs, including biologics, to the U.S. with a cheaper price tag. But this would be up to the drug companies, and it’s unclear that they’d have any financial incentive to do so.
6. How would the plan impact U.S. drug prices?
Not only would patients be able to get cheaper drugs from Canada, but adding the foreign market to the mix could force U.S. drugmakers to lower their U.S. prices to compete.
7. How would it impact Canadians?
The pharmaceutical market in Canada is much smaller than in the U.S. Many fear the U.S. plan would wipe medicine shelves clean in Canada, leaving people there without the affordable prescriptions they need. As it is, the country’s public-health ministry, Health Canada, in early August reported more than 1,800 cases in which drug sellers were unable to meet demand.
8. What’s the timeline for the plan?
The administration will issue what’s called a proposed regulation, then provide the public a month or longer to comment before finalizing it. After that, it expects states and drug sellers to propose pilot projects for the government’s approval.