On Wednesday, the Trump administration announced a deeply flawed “Safe Importation Action Plan” that would allow for the importation of prescription drugs from foreign countries. The administration is seeking comments on its new approach through a proposed rulemaking and draft guidance. National Taxpayers Union (NTU) is deeply concerned about these proposals, since importation and its various forms of implementation offered prior to this point would have many serious consequences for taxpayers. The latest proposal, however well-intentioned, would employ tools that are antithetical to the real pro-taxpayer reforms the American health care system needs.
The plan lays out two “pathways” that would allow Americans to import prescription drugs. One path would involve new regulations from the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) authorizing states, wholesalers, or pharmacists to conduct “demonstration projects to allow importation of drugs from Canada.” Another path would allow drug manufacturers to import drugs, already approved by the FDA, “that they sell in foreign countries that are the same as the U.S. versions.”
Either pathway would have more costs than benefits, which is yet another good reason for all taxpayer advocates to voice their opposition to the proposed rulemaking. For example, as NTU’s research affiliate pointed out in a comprehensive study of activities at the Center for Medicare and Medicaid Innovation, health “demonstration projects” can suffer from uncertain cost-saving estimates as well as designs whose scope can become difficult to contain.
In addition to how it may be implemented, the policy of importation, in itself, raises serious concerns for taxpayers and patients. In a Policy Paper released in July 2016, NTU President Pete Sepp wrote:
"American pharmaceutical innovation – which rests on sensible regulatory approaches, pricing freedom, and intellectual property protection – contributes greatly to the growth of our economy, the attractiveness of our business climate, and the long-term sustainability of taxpayer-funded health programs.
All of these benefits could easily fade away under importation, which is the very antithesis of free trade. Importation would undermine the entrepreneurial economy, introduce price controls, trample on property rights, abet protectionism, harm U.S. exports, encourage socialistic health care policies, and, ultimately, burden taxpayers."
We also noted recently in a letter to the Senate Health, Education, Labor, and Pensions (HELP) Committee that the Congressional Budget Office (CBO) has cast doubt on the claim that importation would dramatically reduce overall drug spending. CBO wrote that the reduction in drug spending from allowing importation from 25 industrialized countries “would be small,” and would be “negligible” if restricted to Canada alone.
Fortunately, there are several paths forward for policymakers who want to reduce drug costs for Americans. As we laid out in an Issue Brief released last year, the U.S. should:
Negotiate and promulgate trade policies that prioritize savings.
Reduce barriers within the FDA drug approval process.
Repeal taxes and unnecessary regulations that raise medication costs.
Have the private market take the lead to reduce drug costs.
Reform government health programs that needlessly raise prices across the system.
Enhance oversight measures of government health care programs.
These are but a few of the ways policymakers and advocates who want to reduce the burdens of rising health care costs on patients and taxpayers can do so. Policymakers’ time and energy are best spent on these bigger priorities.