Pre-empting Dems on health care? HHS announces “pathways” for Canada drug purchases
Democrats ate the GOP’s lunch on health-care messaging in 2018’s midterms. The Trump administration might be preparing better for the 2020 election. Health and Human Services Secretary Alex Azar rolled out a new initiative today that would allow for prescription purchases from Canada, addressing a key Democratic talking point on the cost of health care:
“President Trump has been clear: for too long American patients have been paying exorbitantly high prices for prescription drugs that are made available to other countries at lower prices. When we released the President’s drug pricing blueprint – PDF for putting American patients first, we said we are open to all potential solutions to combat high drug prices that protect patient safety, are effective at delivering lower prices, and respect choice, innovation and access,” said Health and Human Services Secretary Alex Azar. “Today’s announcement outlines the pathways the Administration intends to explore to allow safe importation of certain prescription drugs to lower prices and reduce out of pocket costs for American patients. This is the next important step in the Administration’s work to end foreign freeloading and put American patients first.”
The Action Plan outlines the government’s intention to pursue two pathways to allow safe drug importation from foreign markets:
- Through a notice of proposed rulemaking (NPRM), HHS and FDA would propose to rely on the authority under current federal law (Federal Food, Drug, and Cosmetic Act (“FD&C Act”) Section 804) that would, when the rule is finalized, authorize pilot (or demonstration) projects developed by states, wholesalers or pharmacists and submitted for HHS review, outlining how they would import certain drugs from Canada that are versions of FDA-approved drugs that are manufactured consistent with the FDA approval. The NPRM would include conditions to ensure the importation poses no additional risk to the public’s health and safety and that the demonstration projects would achieve significant cost savings to the American consumer.
- Through guidance, FDA would provide recommendations to manufacturers of FDA-approved drugs who seek to import into the U.S. versions of those drugs they sell in foreign countries. Under this pathway, manufacturers would use a new National Drug Code (NDC) for those products, potentially allowing them to offer a lower price than what their current distribution contracts require. To use this pathway, the manufacturer or entity authorized by the manufacturer would establish with the FDA that the foreign version is the same as the U.S. version and appropriately label the drug for sale in the U.S. This pathway could be particularly helpful to patients with significantly high cost prescription drugs. This would potentially include medications like insulin used to treat diabetes, as well as those used to treat rheumatoid arthritis, cardiovascular disorders, and cancer.
The crescendo for action on this issue has built for some time. It came up in the ObamaCare debate, but Democrats successfully capitalized on growing anger over escalating prices in the US in recent months. Trump had also campaigned on the issue in 2016 but hadn’t taken any action, leaving him politically vulnerable, the Associated Press noted:
The administration’s move comes as the industry is facing a litany of consumer complaints over drug prices, as well as legislation from both parties in Congress to rein in costs. President Donald Trump is supporting a Senate bill to cap medication costs for Medicare recipients. …
As a candidate, Trump called for allowing Americans to import prescription drugs from abroad, and recently he’s backed a Florida law allowing state residents to gain access to medications from Canada.
Trump spiked the football shortly afterward:
Lowering drug prices for many Americans – including our great seniors! At my direction, @HHSGov@SecAzar just released a Safe Importation Action Plan. Our Governors will be very happy too! @GovRonDeSantis@GovofCOhttps://t.co/VIxmZWgYM2
— Donald J. Trump (@realDonaldTrump) July 31, 2019
The question of pharmaceutical importation has its complexities, and it might not be a great idea in terms of long-term policy outcomes. For one thing, drug prices in Canada are artificially low thanks to intervention by the Canadian government, which will be tougher to maintain if demand increases exponentially via re-importation into the US. (Canadians in particular might not be very happy about what happens to their drug prices.) It doesn’t solve the major problems in pharmaceutical production costs, which are consolidation in the industry, copyright issues, and bureaucratic delays in FDA approvals, among others. It’s a Band-Aid over a gaping wound.
However, it’s going to be a very popular Band-Aid in the short run. The new HHS effort also lends itself to a slow rollout, which will play right into Trump’s need to pre-empt Democrats on health care in this cycle, as the Washington Post notes, and that’s very much the purpose of this and other initiatives coming down the pike:
White House advisers, scrambling to create a health-care agenda for President Trump to promote on the campaign trail, are meeting at least daily with the aim of rolling out a measure every two to three weeks until the 2020 election.
One of the initiatives would allow states to import lower-priced drugs from Canada and other countries and bar Medicare from paying more than any other country for prescription drugs — controversial ideas in line with Democratic proposals. Yet it remains unclear the administration has the legal authority to execute some of these policies without Congress. …
One lobbyist, who spoke on the condition of anonymity, described being stunned at a recent White House meeting when Domestic Policy Council Director Joe Grogan said the administration would not let Democrats run to the president’s left on lowering the prices of prescription medicines.
In another tense meeting, top pharmaceutical executives were told bluntly “it wasn’t in the industry’s best interests” to block the bipartisan Senate bill backed by Trump. If it failed, they were told, they’d see “the president of the United States negotiating with Nancy Pelosi [on allowing the government to negotiate drug prices in Medicare] ,” said a person familiar with the meeting.
It might be better for Trump if Congress balks at the initiatives, or if courts block it. That way he gets the benefit of fighting for the people without the risk of incurring the long-term negative impacts of the policies themselves. It also dilutes Democrats’ ability to use health care as a sledgehammer in suburban districts as they successfully did in 2018. In terms of electoral strategy, posturing usually beats legislating, and it certainly beats dealing with unintended consequences. Barack Obama knew that well enough to delay ObamaCare’s rollout until a year after his re-election.
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