Government Seeks to Dismiss Lawsuit Challenging the Canadian Drug Importation Rule

June 17, 2021By Faraz Siddiqui & Serra J. Schlanger

In October 2020, the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) published a Final Rule (which we summarized here) that implemented Section 804 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 384, to allow states and other entities (Sponsors) to develop a Section 804 Importation Program (SIP) to import certain prescription drugs from Canada into the United States (the “Final Rule”). As we previously reported, the Final Rule and HHS’s certification thereof was swiftly challenged in court by the Pharmaceutical Research and Manufacturers of America (PhRMA), the Partnership for Safe Medicines (PSM), and the Council for Affordable Health Coverage (CAHC).

After receiving a few extensions from the court, on May 28, 2021, the government filed a motion to dismiss the lawsuit for lack for subject matter jurisdiction, and alternatively, for failure to state a claim. According to the government’s memorandum in support of the motion, the complaint “presents ‘abstract hypotheticals or requests for advisory opinions’” and must fail on standing or ripeness. The government contends that the plaintiffs, who filed the lawsuit on behalf of their members seven days before the Final Rule went into effect, have not shown any injury-in-fact and merely allege possible future injury. The government argues that deferring the lawsuit until after a SIP is authorized by FDA would not burden plaintiffs’ members.

The government dedicated a substantial portion of its memorandum to describing the Final Rule in order to “reveal[] how many steps must be taken before [the Final Rule and the Certification’s] impact could be felt by any of Plaintiff’s members, let alone the general public.” This description highlighted many of the same concerns that the plaintiffs raised in their complaint. For example, the government cannot approve a SIP that has potential safety concerns, does not adequately ensure the protection of the public health, and does not result in cost savings to the American consumer. But while the plaintiffs asked the court to enjoin the Final Rule based on these concerns, the government assured the court that it could not even approve a SIP that did not adequately address these concerns.

The government’s motion to dismiss reflects an ambivalent attitude on the part of the Biden Administration toward the Trump-era importation rule. On one hand, the government’s motion to dismiss the lawsuit suggests that the Biden administration is not ready to completely close the door on drug importation as a potential approach to lower drug prices. On the other hand, the government’s memorandum goes into great detail on how difficult it will be to pass the statutory bar and obtain FDA approval to import drugs from Canada. The government emphasized that the onus to satisfy the statutory and regulatory criteria falls squarely on the SIP Sponsors. The government also pointed out that Canada’s Minister of Health has issued an interim order that prohibits would-be Canadian sellers from distributing drugs outside of Canada unless they have “reasonable grounds to believe that the distribution will not cause or exacerbate a shortage of the drug” in Canada. According to the government, the Canadian interim order injects further uncertainty into whether and to what extent the Final Rule could be implemented

It remains to be seen how FDA will evaluate SIPs based on the criteria set forth in the Final Rule. Six states (Vermont, Colorado, Florida, Maine, New Mexico, and New Hampshire) have passed laws allowing for the importation of drugs from Canada. We have reported on several of these laws. Two of these states (Florida and New Mexico) have submitted SIP proposals to FDA. We are watching to see FDA’s response, but do not expect to see these plans approved anytime soon, as the government has made no secret of the fact that FDA is not bound to any statutory timeline to make a decision on SIP proposals that have been submitted.