To tame prescription prices, HHS dips a toe into drug importation stream

It came as something of a surprise when Health and Human Services Secretary Alex Azar announced that the administration was exploring the importation of prescription drugs to fight high domestic prices. Azar and Scott Gottlieb, commissioner of the Food and Drug Administration, who also endorsed the new proposal, had previously opposed the idea.

But drug prices in the U.S. have continued to rise and more than 80 percent of Americans say the government should take action. President Donald Trump has said drugmakers are "getting away with murder" and has angrily tweeted at companies about individual price hikes.

Although the candidate Trump supported the idea of allowing patients to import medicines, since he was elected he has not mentioned that option — which is strongly opposed by drug companies.

Now, determined to explore more avenues to curb price hikes, the administration is signaling that it is willing to consider what the industry regards as something of a nuclear option to address a recalcitrant problem. Carefully tailored to focus solely on specific situations where a high-priced drug is made by one company, it is finding support where broader proposals have failed.

"They're approaching it incrementally and wisely, they're focusing on prices where there's a need,” said Dan Mendelson, the founder of health care consultant company Avalere and an official in the Clinton White House. “It is certainly more narrow than the way others have conceptualized it."

Far from a blanket legalization of imported medicines, the working group Azar convened will study importation to combat sudden price increases in specific drugs. The focus is on temporarily bringing in cheaper similar or identical drugs to introduce competition into the U.S. market. The medicines must be off-patent and have only one manufacturer here.

Azar's memo said the effort is designed to avoid the kind of overnight increases seen with Daraprim in 2015. That price hike was engineered by "pharma bro" Martin Shkreli, then CEO of Turing Pharmaceuticals. He purchased the rights to the single-sourced medication that treats parasitic infections and began charging $750 for a pill that formerly cost $13.50 and costs a little more than a dollar in much of the world. Turing was the only U.S. producer.

"This is a workable solution to a discrete problem," said Ameet Sarpatwari, an instructor in medicine at Harvard Medical School in Boston.

But those who support more sweeping importation policies decried the plan's limited scope and suspected the announcement was part theatrics and part a threatening signal to drugmakers.

"This could just be a dog-and-pony show, where they're calling in an expert group to explore avenues of importation — but when all is said and done, they find that they don't want to do this," said Gabriel Levitt, the co-founder of PharmacyChecker.com, a private company that verifies international online pharmacies and compares prescription drug prices for consumers.

"At that point, we'll learn that the exercise was lip service," he added. "Frankly, there's a good chance that that is the case."

This isn't the first time officials have suggested importing drugs from other countries to find better prices. Bills have been offered in Congress to allow it, and George W. Bush administration officials investigated the issue and produced two reports questioning the safety of such efforts in 2004.

Overall, the measure is by no means a silver bullet to the larger problem of rising drug prices, said Rachel Sachs, an associate professor of law at Washington University School of Law in St. Louis.

"It's a really smart move to solve one of the many drug pricing problems we observe, but, of course, it won't address every problem," Sachs said.

Mendelson suggested this working group might be an effort to placate patients who have seen little movement to bring down drug costs, despite the president's repeated promises to provide help.

"If the goal is to make policy changes that are visible and help with the 2018 and 2020 election, I think it's right up there with a lot of the things they're doing," Mendelson said. "If the goal is truly to help consumers with drug prices, not so much."

In addition, since the group's work applies primarily to the generic drug market, a new policy would stop short of taming the price spirals and high launch prices of blockbuster brand-name drugs, which Harvard's Sarpatwari said were the "elephants in the room" of the drug pricing debate.

Levitt pointed out that while a big overnight increase on a drug might trigger action to allow importation, the move would do nothing to stop the yearly increases that drug companies tack on to medicines. Depending on how possible regulations are written, such increases might even be encouraged. The administration has been pressuring pharmaceutical makers to hold down those rising prices but finding tepid support among the companies.

Even if the policy targets just a slice of the overall problem, it could still make a difference for Americans struggling to pay for off-patent drugs and provide more competition.

"If Azar is serious about this proposal, even though it's very limited in scope, it could help deter the most egregious forms of drug price gouging where there are single-source meds," Levitt said.

KHN's coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.