FDA Approves First State Drug Importation Program Under 20-Year-Old Statute, But High Hurdles Remain

The law permitting the importation of cheaper prescription drugs from Canada—Section 804 of the Federal Food, Drug, and Cosmetic Act (FDC Act)—has been on the books for decades.  After its enactment in 2003, successive administrations thwarted its implementation by declining to certify to Congress that importation will pose no additional risk to public health and safety and will result in a significant reduction in cost to American consumers, as the statute requires.  The waning months of the Trump administration saw a flurry of activity to implement Section 804, with an Executive Order, a final rule, and the required certification issued in quick succession. The final rule permitted FDA to solicit Section 804 Importation Programs (SIPs) from States and Tribes to import prescription drugs from Canada. So far, the Agency has received SIPs from at least five states.

The final rule met quick opposition from the pharmaceutical industry. In late 2020, industry groups challenged the final rule in federal court, but the case was dismissed for lack of standing.  The following year, the same groups submitted a citizen petition to FDA arguing that the rule violates the constitution and the FDC Act.  Last week, FDA denied the citizen petition and authorized its first SIP, which had been submitted by Florida. A statement issued by Florida’s governor Ron DeSantis claimed that the authorization was the result of Florida’s lawsuit accusing the Biden administration for unreasonable delay.

FDA’s authorization letter to Florida’s Agency for Health Care Administration confirmed that the SIP complies with section 804 of FDC Act, in that it will result in significant cost savings to consumers without posing additional risk to the public’s health and safety. The authorization is valid for two years from the date the state files for entry of its first shipment of drugs, and may be extended for subsequent two-year periods. See 21 C.F.R. § 251.6. But the state still needs to pull together several stakeholders and expend additional effort before it can import any drugs.

More Steps Ahead

As the SIP sponsor, Florida will be responsible for implementing the program. However, before the state can start importing drugs, it must first submit for FDA approval a pre-import request for each eligible prescription drug it plans to import into the United States. See 21 C.F.R. § 251.5; § 251.6(c). This request must provide details about, among other things:

1. The foreign seller that will purchase the prescription drug directly from its manufacturer, along with invoices, batch, and lot/control numbers to verify the sale and the units sold. This must be a Health Canada-licensed wholesaler that is registered with FDA as a foreign seller.
2. The importer that will purchase the prescription drug directly from the foreign seller, along with invoices, batch, and lot/control numbers to verify the sale and the units sold. This must be a U.S.-based entity licensed as a wholesale distributor or a pharmacist that will import the drugs.
3. A description of each eligible drug covered by the pre-import request. This includes the name and identity of the Health Canada-approved drug; information about the API manufacturer; and information about the manufacturer of the eligible prescription drug.
4. The FDA-approved counterpart drug and NDA or ANDA number, and an attestation and information statement from the manufacturer that the drugs meet the conditions in the FDA-approved NDA or ANDA (including cGMP compliance).
5. A plan to test the drugs, as required by section 804(e), including for authenticity, degradation, and to ensure compliance with the established specifications and standards.
6. Proposed relabeling and proposed NDC numbers for the drugs to be imported.
7. Information about the facility where the relabeling and/or repackaging will occur for the eligible prescription drug.
8. Information related to the importation (e.g., date, location, warehouse).

Florida has 12 months to submit a pre-import request. FDA would need at least 30 days to review each pre-import request. The government would require at least another 30 days to examine the shipment at the U.S. Customs and Border Protection (CBP) port of entry.

Major Barriers Persist

The state plans to start by importing medications for chronic conditions like HIV/AIDS, mental illness, prostate cancer, and urea cycle disorder for patients under the care of its state agencies before expanding the program to Medicaid patients. If FDA grants Florida’s pre-import request for these drugs, Florida will be required to ensure supply chain integrity, monitor and submit adverse event reports, comply with drug recall procedures, and send quarterly reports to the FDA about the imported drug, cost savings, and potential safety or quality issues. FDA may suspend or revoke a SIP at any time if the SIP sponsor can no longer demonstrate that the SIP complies with section 804, or for any of the other reasons listed under 21 C.F.R. § 251.7.

Once fully implemented, the state estimates the SIP will save its taxpayers up to $183 million per year. But it is too early to tell whether this or any other SIP that FDA authorizes will succeed in reducing the price of the imported drugs. Major barriers still persist. For example, the Canadian government reiterated its commitment to safeguard Canada’s domestic drug supply and has issued regulations to prohibit bulk exports to the United States that will cause or worsen drug shortages in Canada. Additionally, industry stakeholders remain convinced that the SIPs will impact drug quality and patient safety, and they may bring further lawsuits against these programs.