Citizens Against Government Waste (CAGW) has long opposed importing drugs from Canada and other foreign countries.  The process would include adopting price controls, exposing a safe and secure U.S. pharmaceutical distribution system to dangerous counterfeit drugs and fraud, and cost more money than it could save.  Canada’s socialistic healthcare system also rations care, which results in long waiting periods for specialists, diagnostics, and surgery.  Canada and other nations also free ride on research paid for by U.S. consumers and taxpayers.

But these facts have not stopped states, members of Congress, or the Trump administration from trying to pass laws or implement regulations that would allow importation of cheap Canadian drugs into the U.S.

The Trump administration pushed the Food and Drug Administration (FDA) to design a plan that would allow Canadian drugs to be imported by states and other entities, like pharmacists and wholesalers, and be sold in the U.S.  In September 2020, the agency finalized a rule that laid out the requirements it would take to create such a program and in November 2020, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit, stating that the final rule disregards key protections of the Food, Drug, and Cosmetic Act that are “designed to ensure patient safety” and there is “no indication that the Final Rule will reduce costs to actual American patients.”

On June 1, Inside Drug Pricing (IDP) reported that the Department of Health and Human Services (HHS) filed its response to the lawsuit and asked the judge to “dismiss the case” because “Plaintiffs cannot establish standing or ripeness.”  HHS argued that no members of the association are in “imminent danger of imports” since six states have passed laws to import drugs, and only two have submitted proposals to the FDA, which has no timeline to complete the reviews.

The HHS brief lays out several reasons why it would be difficult for a third-party entity to receive FDA approval to import drugs from Canada, like “finding a well-qualified Foreign Seller,” or providing a “detailed summary and importation plan that describe how the Sponsor will ensure, among other substantial criteria, that the imported eligible prescription drugs meet the Statutory Testing requirements,” and going through several rounds of FDA review.

The brief also notes that the Canadian Minister of Health “issued an interim order ‘to help safeguard the Canadian drug supply by ensuring that bulk importation frameworks, such as the one recently established by the United States, do not cause or exacerbate a drug shortage in Canada’” and that the Canadian “interim order prohibits would-be Canadian Foreign Sellers from distributing certain drugs for consumption outside of Canada unless they have ‘reasonable grounds to believe that the distribution will not cause or exacerbate a shortage of the drug.’”  Among other reasons the Canadians are not interested in participating is the drug shortage that has been caused by their socialistic healthcare system.  For example, of the 200 top-selling drugs in the United States, Canadians only have access to 120.

While this undertaking was the first time that an HHS secretary and FDA commissioner moved forward in trying to set up such an importation system,  It certainly appears that the government has laid out many of the same arguments that CAGW had been making about the difficulty, impracticality, complexity, and cost of setting up state-run drug importation.

CAGW understands the concern over high drug costs, but competition and innovation drive down costs, not price controls.  The U.S. leads the world in pharmaceutical research and development precisely because it has not adopted a socialistic healthcare system that uses price controls to keep down costs.

We continue to urge the administration and Congress to work together to improve international trade agreements that would protect U.S. intellectual property, prevent compulsory licensing, and discourage other countries from free riding on U.S. research by paying their fair share of U.S. research and development.  Not only would that help U.S. consumers, respecting innovation and property rights would encourage more research and development in other countries that would benefit everyone’s health and economic welfare.