As states continue to implement wholesale prescription drug importation programs, Congress is considering legislation that may impact state program design and flexibility. Currently, six states have enacted laws to import lower cost drugs from Canada and are working to design programs that meet the requirements in the final federal rule issued in October 2020.

As part of the standard process for reauthorizing the FDA’s prescription drug user fee program (known as “PDUFA”)[1], the Senate is considering changes to Section 804 of the Food, Drug, and Cosmetics Act, the statute that allows for state importation. While the proposed changes would codify the concept of “Section 804 Importation Programs” and potentially further support state efforts, the proposed language may also create challenges and delays for states interested in pursuing importation.

State Concerns on Proposed Importation Provisions in PDUFA Reauthorization

The proposed Senate language would codify parts of the final rule from 2020 as part of the Food, Drug, and Cosmetics Act, potentially giving states less flexibility. The National Academy for State Health Policy (NASHP) along with the implementing states, commented on a number of issues in the proposed and final rule in 2020. Provisions included in the final rule that are proposed in the Senate language that are of concern to states include:

• Limiting state importation programs’ supply chains to a single manufacturer, foreign seller, and importer. Limiting state importation programs to just one foreign seller creates the risk that a manufacturer may cut off its supplies to a single foreign seller. It may also preempt normal forces of market competition that would otherwise help maximize savings. Furthermore, the proposed Senate language does not reflect the option outlined in the final rule for states to add more foreign sellers in the future, which could help drive down costs for consumers.
• Requiring state programs to document specific entities that will serve as the foreign seller and importer in a program proposal. Potential program participants (i.e., importers, foreign sellers, relabelelers, etc.) may be hesitant to sign onto a program that has not yet been approved by the US Food and Drug Administration (FDA). The final rule allows states some flexibility and gives states up to six months to identify a foreign seller after submitting their importation program applications to HHS. This is not reflected in the proposed Senate language and states may face a chicken-or-egg dilemma if this requirement is codified in statute without more flexibility.
• Adding in prohibitions for certain types of drugs to be included in state importation programs, including drugs with Risk Evaluation and Mitigation Strategies (REMS) in place. Categorically excluding drugs subject to a REMs ignores the fact that REMS vary widely in their requirements. Many REMS could be imported effectively under a state program with no additional risk.

Adding Potential Roadblocks or Delays

In addition, the proposed Senate PDUFA reauthorization language includes provisions that may delay state implementation or impact long-term sustainability. Key concerns include:

• Requiring the Department of Health and Human Services (HHS) to reissue or amend the current final rule to align with the statute changes. Requiring HHS to change or reissue the current regulation could impact states that are currently expending resources to implement programs under the final published regulations.
• Adding a new requirement for HHS to certify that importation is subject to “adequate and consistent oversight.” Current statute requires the HHS Secretary to certify to Congress that importation does not pose significant safety risks and will result in savings for consumers. It’s not clear what “adequate and consistent oversight” might entail but adding this requirement to statute means that if this step is not taken, state programs under the current regulatory structure may not be able to proceed.
• Removing the requirement that the Secretary must have “substantial evidence” to terminate importation programs. Current statutes allows the HHS Secretary to suspend importation if they find that, within one year of regulations becoming effective, the benefits of importation do not outweigh any harms. The authority to terminate programs after one year may not be a realistic timeline for states or the FDA to show programs are beneficial. Further, removing the “substantial evidence” requirement could lower the bar to justify program termination.

Timeline for Federal Action

The latest PDUFA reauthorization must pass by September 30, 2022. The House and Senate are currently working with different draft versions which means there will be a conference committee to reconcile the different language, likely ahead of Congress’ recess period beginning August 8. The House version does not currently have importation language.

To learn more about state implementation of importation, review NASHP’s state strategy implementation tracker.

[1] Last updated in 2017, the prescription drug user fee act (PDUFA) is intended to update the process and landscape for drug approvals every five years. The reauthorization is also a vehicle to address other FDA-related provisions such as the importation of prescription drugs and baby formula.