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Azar drug importation proposal would have narrow impact

HHS proposal designed to prevent ‘Shkrelis,’ not high drug prices overall

Last week, HHS Secretary Alex Azar requested that Food and Drug Administration Commissioner Scott Gottlieb create a working group to find how to safely import drugs from abroad in cases when their U.S.-marketed equivalents undergo dramatic price increases. But experts said the effect of such a policy on prices—if it passes—will be limited, according to MedCityNews.

In his announcement, Azar pointed to the now infamous example of the toxoplasmosis drug Daraprim, which increased from $13.50 per pill to $750 in 2015, drawing nationwide scorn for Turing Pharmaceuticals and its CEO, Martin Shkreli. Shkreli was sentenced to seven years in prison earlier this year following his August 2017 conviction on charges of securities fraud and conspiracy. Turing, which has since changed its name to Vyera Pharmaceuticals, is currently losing money, Stat reported recently.

Several political leaders have proposed allowing importation of drugs, MedCityNews reported. In May, Vermont Gov. Phil Scott signed a bill that would allow importation of drugs from Canada, though HHS must still certify the law. Sen. Bernie Sanders, the state’s junior senator, also introduced a bill in the Senate that would allow the same, with cosponsorship from several Senate Democrats. The bill would allow wholesalers, pharmacies, and individuals to import a range of medications.

However, the HHS proposal is narrower, focusing specifically on drugs that have seen significant price increases. Gerard Anderson, professor of health policy and management at Johns Hopkins University, and several colleagues made a similar proposal in a paper published in JAMA in February 2016. Under their proposal, GlaxoSmithKline – the original manufacturer of Daraprim – would be able to import the drug from the United Kingdom, where it sells for less than $1 per tablet. The paper compared the proposal to FDA allowances for importation during shortages of critical medications.

Still, Anderson said in a phone interview with MedCityNews that the HHS proposal will not likely have a broader spillover effect on drug prices, but will only affect the specific drugs that are included. “For a very narrow subset of medications, it could take the Martin Shkrelis out of the ballgame because these drugs are very inexpensive in other countries,” he said.

In addition to Turing, other companies that have become notorious for raising drug prices include Shkreli’s prior company, Retrophin, and Valeant Pharmaceuticals. Questcor Pharmaceuticals raised the price of Acthar Gel from $1,650 per vial to $23,269 in 2007, and the price has risen to $38,892 since Questcor’s 2014 acquisition by Mallinckrodt Pharmaceuticals. More recently, larger drug companies have also taken heat for smaller price increases. Pfizer backed down from a plan to raise the prices of about 100 of its medications after criticism from the Trump administration, while Novartis and Merck & Co. have pledged to limit price increases as well.

The government stipulating what constitutes a “dramatic price increase” could create a de facto price ceiling that drugmakers would stay under when changing their prices, said Lev Gerlovin, vice president at Boston-based consultancy Charles River Associates, in a phone interview. It’s hard to assess whether that would have a material effect on the industry, given that the ceiling may be greater than what most manufacturers already tend to do as a matter of course. However, while cautioning that he is not a Washington observer, Gerlovin said likely industry pushback citing patient safety concerns makes the proposal appear unlikely to pass.

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