The Trump administration on Wednesday unveiled two new plans that could allow Americans to pay cheaper prices for expensive drugs, including insulin.
HHS and the Food and Drug Administration will move forward with two regulatory proposals that are priorities for President Donald Trump. The first would authorize pilot programs by states, wholesalers or pharmacists to import Canadian versions of certain FDA-approved drugs.
The other would give drugmakers a way to start negotiating new distribution contracts in order to sell their lower-priced foreign versions of a wide swath of drugs. These would include biologics like insulin and arthritis medication.
"We've unveiled unprecedented steps to cut down on foreign freeloading off American patients, and today's announcement is another step in that direction," HHS Secretary Alex Azar said, echoing a line that Trump has used about the lower prices other countries pay for drugs that critics say are essentially subsidized by the U.S.
Azar and acting FDA Commissioner Ned Sharpless didn't lay out a specific timeline for the new proposals, but an FDA spokesperson said the agency "is committed to advancing these policies as quickly as possible. We expect to have additional announcements in the coming months."
The two strategies leave many questions unanswered until all the logistics are worked out through a proposed rule. The second regulatory idea, for instance, doesn't make room for biosimilars competing in Europe with AbbVie's Humira — which holds the U.S. market for arthritis medication until 2023.
This policy would also rely on manufacturers to use a new national drug code in order to sell their cheaper foreign version in the U.S. if they can't get out of supply chain contracts with their existing code for the drug.
Azar said the idea came out of conversations with manufacturers about the "perverse incentives" within the current supply chain system. But as to whether the guidance will put enough pressure on manufacturers to in fact lower their U.S. list prices, Azar punted to the rulemaking process.
"That's why we'll be going through good guidance practices, to make sure we implement the system to achieve the objective," the secretary told reporters.
In terms of the overall plan, Azar said he hasn't discussed it with pharmaceutical industry representatives. Drugmakers have been up in arms the past week over proposed congressional reforms to Medicare Part D financing. The strategy came out of internal deliberations by administration officials, Azar added.
There are hurdles as well, Azar and Sharpless acknowledged, including Canada's willingness to send drugs to the U.S. Momentum for the Canadian import idea has already sparked some outcry from Canadian pharmacy groups, and Azar indicated it will be largely up to the states and wholesalers to broker relationships. He added that supply chain questions will be addressed in the notice of proposed rulemaking.
"There are hurdles of course, but the hurdles now are known, and they are surmountable, we are making that clear," Azar said. "We're open-minded and we're open for business."
This strategy from Trump's deputies comes as the politics of healthcare heat up for the 2020 campaign. Drug prices are a top issue for voters and a policy priority for Trump. But the administration has faced a series of setbacks on their regulatory agenda.
The issue has also been deeply contentious for Senate Republicans. Even though the Senate Finance Committee passed a major set of proposals, nearly all the GOP members of the panel plus Sen. Bob Menendez (D-N.J.) fought to strip out the cornerstone policy — a limit to how high manufacturers can raise their list prices each year. Panel leaders want to advance the package to the Senate floor in September.
House Democrats have yet to release a plan of their own, despite months of negotiating with the White House.
The HHS announcement represents another public blow to the pharma industry. Azar characterized it as a major departure for the federal government, where officials haven't seriously considered importation. The move aligns with policies championed by progressive Sen. Bernie Sanders (I-Vt.), a contender for the 2020 Democratic presidential nomination.
One major pharmaceutical trade group hit back at the proposal. Jim Greenwood, CEO of the Biotechnology Innovation Organization, said there is "no way to adopt an importation scheme that doesn't jeopardize the health and well-being of America's patients."
"This is a misguided attempt to keep an ill-informed campaign promise," Greenwood continued. "The burden is on the leadership of the Department of Health and Human Services to ensure this actually leads to lower costs for consumers — not just for insurance companies and pharmacy benefit managers — and no harm is inflicted on patients and local communities."
