• The Trump administration on Wednesday proposed allowing the importation of lower-priced drugs from foreign countries in its latest bid to lower patient out-of-pocket costs. 
• The proposal rests on the belief that manufacturers would offer imported drugs at a lower price if they sold them under a different National Drug Code than products designated for the U.S. market, a claim that analysts disputed. The pharmaceutical sector’s leading trade group, meanwhile, opposed the plan on safety grounds.
• The reimportation plan comes after several administration setbacks, including abandonment of a ban on certain drug rebates and a court defeat of a requirement that prices be listed in TV advertising. The White House has also faced significant opposition to its plan for basing Medicare reimbursement for some drugs on overseas prices.

Drug importation as a means to lower prices is an old idea in health policy, and often has been rejected because of safety concerns or because the Food and Drug Administration did not have the resources to oversee such a program.

Those concerns didn’t seem to trouble Health and Human Services Secretary Alex Azar and acting FDA Commissioner Ned Sharpless, who promoted Wednesday a two-pronged approach.

The first is a limited one, with HHS granting demonstration waivers to states, pharmacies and wholesalers to import Canadian approved drugs that comply with FDA regulations. This pathway would require that the importation “result in a significant reduction in the cost of covered drug products to the American consumer” in order for a waiver to be granted.

It would apply only to small-molecule drugs, not biologics and injectable drugs like insulin that have been subject of criticism over steep price increases.

The second pathway would permit manufacturers to import drugs produced in other countries and, if they are proven to be the same as U.S.-sold versions, be marketed under a separate NDC code, a plan that would include expensive biological drugs. This would provide a distribution channel separate from established contracts locked into rebating from list price and potentially allow drugmakers to offer a lower price, Azar said.

“As we first started discussing the perverse incentives of the rebates system in our country, there was significant interest from pharmaceutical companies as to whether they could bring product on the market with a different national drug code that would enable lower list prices,” he told reporters in a conference call. “That would be for them to figure out and for them to consider the implications of their own contracts and provisions within the supply chain.”

This claim was challenged by ISI Evercore analyst Umer Raffat. “What would be the incentive for any pharma manufacturer to import its own drugs at lower price?” he wrote in a note to clients.

HHS did not respond to a question from BioPharma Dive on whether the department had forecasted potential cost savings to payers or consumers.

In a break with past claims about the FDA’s ability to oversee importation, Sharpless said: “The FDA can do this. With the details of the various pathways, we’ll work that out and we’ll know more about the resource needs, but this is something addressable within the agency and [is something] the agency fully supports.”

Azar pointed out changes in distribution channels have made it easier to assess the safety of drugs brought in from locations outside the U.S.

“We’ve seen consolidation and internationalization of the wholesale distribution channels,” he said. “The very large distributors now playing in many countries would be able to manage a very complex but secure drug distribution system across borders.”

PhRMA, the drug industry’s top lobbying group, disputed those claims as it announced opposition to the plan.

“There is no way to guarantee the safety of drugs that come into the country from outside the United States’ gold-standard supply chain,” PhRMA President Stephen Ubl said in a statement. “Moreover, Canadian officials have said that the policy is unworkable, and they will not risk shortages by diverting their medicine supply to the United States.”