Guest Article

(From the July 24, 2006 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Prescription Drug Reimportation Provisions on the Move in Congress -- Again

Both the House and Senate have approved bills that would permit the reimportation of certain prescription drugs. However, the Senate- and House-approved Homeland Security Appropriations bills only would prohibit U.S. Customs and Border Protection from preventing individuals not in the business of importing prescription drugs from bringing into the U.S. Food and Drug Administration-approved drugs purchased in another country, and the Senate bill would specifically limit this to drugs purchased in Canada. The House-passed Department of Agriculture appropriations bill would go further by prohibiting the FDA from preventing individuals, wholesalers, or pharmacists from importing FDA-approved drugs from other countries. But this latter provision, which would be most beneficial to employer-sponsored health plans, seems the least likely to be enacted.

Background

The debate over permitting prescription drug reimportation has been raging in Congress for years, and especially during election years. Giving voters the option of buying less-expensive, imported prescription drugs is politically appealing for obvious reasons. But ongoing concerns about safety have derailed these efforts so far.

Employers have an interest in this debate because prescription drug reimportation has been touted as one way of combating escalating prescription drug prices. According to the theory, drug reimportation would give pharmacists and wholesalers the leverage they need to negotiate more favorable drug prices with manufacturers because they would be able to purchase the same drugs for less money from other countries. Presumably these savings would be passed on to consumers, including employer-sponsored health plans.

In 2000, President Clinton signed legislation that would have allowed pharmacists and wholesalers to reimport FDA-approved drugs from other countries. However, implementation of that provision was specifically conditioned upon the Secretary of Health and Human Services determining it was "safe and cost effective." HHS Secretary Donna Shalala decided the provision did not meet those criteria, and the Bush Administration declined to reverse her decision. As a result, this provision never was implemented.

Outlook

It remains to be seen whether the outcome will be any different this time. First, Congress has to decide which, if any, of the three provisions it will include in final legislation. Given the Administration's continued opposition to the prescription drug reimportation concept, the more narrow provision approved by the Senate would appear to be the most likely candidate. But this provision would benefit only those individuals who can easily and cost-effectively go to Canada to have their prescriptions filled, so it would not be helpful to the vast majority of Americans. Furthermore, because it would not extend reimportation authority to pharmacists and wholesalers, it would have little or no effect on prescription drug prices for other consumers -- including employer-sponsored health plans.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Laura Edwards 202.879.4981, Mike Haberman 202.879.4963, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Carlisle Toppin 202.220.2067, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2006, Deloitte.