The Department of Health and Human Services (HHS) will be under heavy political pressure to open up a wide new prescription drug import avenue, one that drug manufacturers say will be lined with packaging and labeling potholes. Congress passed the Medicine Equity and Drug Safety Act last October; its purpose is to allow U.S.-made prescription drugs that were exported to a specific list of developed countries to be reimported into the U.S. The bill’s rationale is that drug prices to U.S. consumers can be appreciably lowered since Pfizer, Lilly, Merck and others often sell prescription drugs more cheaply in Canada, Israel and the EU—often because of price controls. So why not allow pharmacies and wholesalers to reimport those cheaper drugs and pass along the savings? Today, that reimportation is illegal. It is legal, however, for Americans to cross the Canadian border, buy “personal use” amounts of cheaper drugs and bring them back to their medicine cabinets. Senators and congressmen who were up for re-election in 2000, including Sen. James Jeffords (R-VT), sponsor of the Senate bill—which passed by a vote of 74-21—often led those Canadian jaunts, and frequently with reporters in tow. But Jeffords and other legislators thought it a bit unfair that only a limited number of buyers had access to lower prices. Why not everyone? Hence the Medicine Equity bill, which also passed the House by a whopping margin of 370-12. The scene now shifts to HHS, which must make two key determinations prior to the commencement of wholesale reimportation. The HHS secretary must affirm that reimportation by wholesalers and pharmacists can be done safely and will result in lower prices. PhRMA, the drug manufacturers trade association, strongly opposed the Jeffords bill, ostensibly because it would create a labeling and packaging nightmare leading to serious safety problems. That was the argument made by Roy Sturgeon, senior vice president, global quality assurance and quality control at Wyeth-Ayerst Global Pharmaceuticals, Philadelphia, PA, and Mark Lipstein, director of product and systems validation worldwide at Bristol-Myers Squibb, New York, NY, when they briefed members of Congress on the potential evils of the Jeffords bill. The National Drug Wholesalers Assn. (NDWA), National Assn. of Chain Drug Stores and the American Pharmaceutical Assn., which represents the pharmacists, also opposed the bill. The NDWA argued that labeling and packaging operations performed by wholesalers would result in the FDA reclassifying them as “repackagers,” which would trigger new regulatory requirements and business costs.
Major packaging implications The labeling and packaging implications of this drug reimportation program are immense. First, foreign-language labels would have to be removed and English-language labels printed and applied. In some cases, containers and closures used overseas would be inappropriate, or even illegal. Nikki Mehringer, quality control leader for Europe and North America at Eli Lilly & Co., laid out some of the differences between U.S. and foreign packaging when she testified before the House Commerce Committee’s oversight subcommittee last October. “Packaging components may look the same but may be made of different materials,” she stated. “Requirements vary and may have safety implications. The U.S. has strict standards for child-resistant containers that may not be approved in other markets.” Steve Giroux is aware of the packaging challenges. He owns three pharmacies in the Buffalo, NY area and is a member of the National Assn. of Community Pharmacists, the major backer of the Jeffords bill. Independent pharmacies do much of their drug buying through what are called cooperatives with names like Rochester Drug, North Carolina Mutual and Value Drug. Giroux is chairman of the board of Rochester Drug, which has 500 customers in western New York, Pennsylvania and New York city.
Cutting into savings? Giroux says adding a packaging operation to Rochester won’t be a problem, particularly since the co-op expects to save 40% to 60% on the price of drugs it buys from overseas suppliers. “I say if there are hurdles to overcome, bring them on,” emphasizes Giroux. Independents like Giroux also buy from the major wholesalers that have whole programs set up for that purpose. Bergen Brunswig, Orange County, CA, for example, has a “Good Neighbor Pharmacy” buying cooperative for independents. What Giroux doesn’t specify is how much of the gross savings will be offset by transporting the drugs back, and the cost to set up and operate this extra packaging operation, not to mention purchasing the materials involved. Ronald Streck, president of the NDWA, was outspoken in opposition to the Jeffords bill. He argued that reimportation would require the wholesaler to prepare new package inserts, a function that would force the FDA to reclassify the wholesaler as a “repackager.” That would impose new regulatory requirements on the wholesaler.
Some may be ready All the major wholesalers have repackaging operations of one sort or another. Bergen has RightPak. Cardinal has National PharmPak Services, which already is an FDA-licensed repackager for retail, hospital and managed-care pharmacies. Mail-order pharmacies are also likely to jump in with both feet. Their trade association, the Pharmaceutical Care Management Assn., was pretty quiet during the debate over the Jeffords bill. But Dale Thomas, spokesman for Advance PCS, says, “We are talking to various industry segments about that bill.” Advance PCS’s two mail-order pharmacies fill 300ꯠ prescriptions a week. All pharmacy segments will have some time to study the implications of reimportation. The Jeffords bill does not contain a deadline. But the HHS will be under tremendous pressure from Congress. Still, drug manufacturers are going to have a hard time carrying the day simply by focusing on safety objections. After all, few manufacturers have “clean” records. Wyeth-Ayerst, for example, whose Roy Sturgeon appeared on Capitol Hill proclaiming the safety pitfalls of the Jeffords bill, was itself a signatory to an FDA consent decree in October committing the company to follow good manufacturing practices at its facilities in Marietta, PA, and Pearl River, NY. Assuming that the HHS green-lights the program, one thing manufacturers cannot do is bring undue pressure on their foreign wholesalers to refuse to send pharmaceuticals back to the U.S. The Jeffords bill includes some criminal sanctions on this score. A top packaging official at a major pharmaceutical company declines to even discuss the reimportation issue. Another step U.S. manufacturers could take is to simply reduce their exports. What is probably a more likely impediment is congressional resistance to fully funding the new monster bureaucracy it created. When it passed the Jeffords bill, legislators did fork over $23 million for implementation. The FDA is going to have to hire a whole new office full of administrators and investigators. Primarily, each lot of imported pharmaceuticals has to be statistically sampled and tested for authenticity and potency. This must be done at a third-party laboratory. When that accreditation program is going full-tilt (which the FDA estimates will happen in four years), the agency will need $92.5 million a year to run it. All of that will have to come from Congress. Because of the strong vote in Congress for the Jeffords bill, the presumption is that the HHS will quickly initiate a reimportation demonstration program, probably in the first half of 2001. If the demonstration is successful, the floodgates will open.
