Statement on Importation of Prescription Drugs

Submitted by the

Academy of Managed Care Pharmacy

to the

United States Department of Health and Human Services

Task Force on Drug Importation

Friday, May 14, 2004

Mr. Chairman, and Members of the Task Force, the Academy of Managed Care
Pharmacy appreciates the opportunity to participate as you receive
testimony on issues relating to importation of prescription drugs. My
name is Marv Shepherd, and I am the Director of the Center for
Pharmacoeconomic Studies and Chairman of the Pharmacy Administration
Division, College of Pharmacy, The University of Texas at Austin. I have
been studying the issue of drug importation since 1994. I have written
and made presentations on the subject extensively and have testified
before congressional committees as an expert witness on this issue on
numerous occasions.

The Academy of Managed Care Pharmacy (AMCP) is a professional
association of pharmacists and associates who serve patients and the
public by the promotion of wellness and rational drug therapy through
the application of managed care principles. The Academy has more than
4,800 members nationally who provide comprehensive coverage and services
to the more than 200 million Americans served by managed care. The
foundation for the views presented in this statement is our member\'s
responsibility as health care professional trained in medication therapy
to serve the health care needs of patients.

The Medicare Prescription Drug Improvement and Modernization Act of
2003, Public Law 108-173 (MMA) gives the Secretary of Health and Human
Services (HHS) the authority to implement a system in the United States
for the importation of Canadian prescription drugs. However, Section
1121 of MMA permits the Secretary to implement this system only if he is
first able to certify to the Congress that it would be safe and
cost-effective. MMA contemplates two different methods of importation of
prescription drugs that should be distinguished and evaluated separately
by the Secretary in terms of their safety and cost effectiveness.

The first method of importation of prescription drugs is importation by
individuals. AMCP is opposed to proposals that would allow individuals
to import prescription drugs for personal use. There is no system for
double checks on accuracy, no counseling, no one to call if questions
arise. The potential for problems is particularly serious where U.S.
citizens are ordering their prescriptions online. The prescription
ordered via the internet from what is purportedly a Canadian pharmacy
may in fact not be supplied by a Canadian pharmacy at all. It may never
have been within the borders of Canada. Recent news stories have
revealed that a company that helps Americans order medications from
Canada is now using a British pharmacy to fill backordered
prescriptions.[^1] I am aware of situations in which Americans believe
they are receiving prescriptions dispensed in Canada when in reality
these prescriptions are coming from a variety of sources. For example, a
recent article in *Scrip* reports that one Canadian Internet Pharmacy
Provider (Canadapharmacytrust.com) is shipping pharmaceuticals which
were made in Mexico to U.S. residents. The article goes on to say that
the drug products were not approved by Health Canada nor the FDA.[^2]

Furthermore my research shows that in 2003 Canada imported
pharmaceuticals from over 100 countries. Canada does have federally
negotiated mutual recognition agreements with 18 Western European
countries on Pharmaceutical GMPs (Good Manufacturing Processes). But as
noted, Canada is importing drugs from over 100 countries including
Ecuador, Mexico, Brazil, and China. From 2002 to 2003, Canadian imports
from India have increase 109%, Singapore 72%, Mexico 50%, Italy 282%,
plus many others. Even though U.S. pharmaceutical exports to Canada have
increased nearly one billion dollars since 1999, as a proportion of all
Canadian imports, U.S exports to Canada have been decreasing. In 2000,
U.S. drugs comprised 55% of all Canadian drug imports, but in 2003 it
has dropped to 43%. Canadian drug imports make up over half of the
Canadian drug market.

The personal importation of pharmaceuticals in the U.S. is growing
enormously and, in my opinion, is out of control. There is no guarantee
that legislators, regulators and pharmacists can provide the information
necessary to consumers letting them know whether the imported
prescription drugs they are receiving are adulterated, counterfeit, or
approved for use in the United States. There is no way for a consumer to
determine whether their medication is safe to take, and there is no way
for their local (U.S.) pharmacist to determine whether the medication is
safe and effective.

Some manufacturers produce drugs to be sold outside the U.S. on a
different manufacturing line than those marketed within the U.S. These
drugs may have different formulations which may mean different salt
forms and different bioavailability (which refers to how quickly the
medication is absorbed into the body). One example is Synthroid, a
widely used thyroid medication. The Synthroid made and sold in the U.S.
is not the same Synthroid exported to Canada from the U.S. Switching
patients who have been stabilized on one product to a product that is
supposedly the same, but either made or sold in a foreign country, may
create medical complications in some patients.

In addition, when patients receives their medications through individual
importation, the community or mail-service pharmacists that review and
provide safety checks on their prescription medications have no
opportunity to intervene on the patient\'s behalf. No pharmacist is
involved who can verify that the patient understands how to take the
medication appropriately.

The second type of importation would allow the importation of certain
prescription drugs by pharmacies and wholesalers. AMCP has concern with
proposals that would allow the importation of prescription drugs for
sale in the United States. AMCP understands that such proposals are
being offered to address the plight of individuals unable to afford much
needed prescription drugs; eliminate unjustified global pricing
disparities; and require members of the global economy to share
reasonably in the costs of pharmaceutical research and development. As
an organization representing health care professionals, AMCP believes
that until it can be satisfactorily demonstrated that there are adequate
resources to monitor the importation of prescription drugs in order to
assure that their quality and safety have not been compromised, we will
be unable to support these proposals.

By allowing pharmacies and drug distributors to purchase pharmaceuticals
abroad for sale in the United States, importation proposals are intended
to provide Americans access to prescription drugs at lower prices. AMCP
supports the goal of lowering drug costs for the American consumer.
However, the anticipated savings importation programs may generate is
uncertain because of factors such as the differential in price for a
specific drug in and out of the United States, the availability of the
product for importation, and the additional overhead that may be needed
for significant importing of drugs. For example, while Canadian drug
prices for certain brand name products have been shown to be
considerably less than prices in the United States, other drugs,
particularly generics, are as reasonably priced in the United States as
elsewhere. Foreign supplies of domestically produced drugs with
dramatically lower prices may be inadequate to support large-scale
importation thus limiting the potential savings available to American
consumers through importation and creating shortages in the exporting
country. We don\'t know - and we need to have more information and
analysis to determine - if implementation of a drug importation program
would actually result in savings to the American public and, if so, the
likely extent of such savings

Importation also warrants study because it may pose unintended financial
consequences for American consumers. AMCP believes that importation will
result in decreased pharmaceutical innovation. Allowing the importation
of pharmaceuticals may result in these negative effects and bring
downstream cost-shifting by manufacturers to compensate for lost
profits.

One of the potential unintended negative consequences of a program that
permits pharmacies and wholesalers to import prescription drugs is a
two-tiered system of drugs based on product cost. Because some states
may base their reimbursement to pharmacies for dispensing prescriptions
on an importation-based acquisition cost, it is not difficult to imagine
that pharmacies would have to establish a dual inventory. For example,
in a state with its own importation program, you could have state
employees and those state residents eligible for a state pharmaceutical
assistance program receiving imported drugs with the pharmacy reimbursed
based upon the anticipated lower-priced imported drugs while those
individuals who are covered under a private health plan would receive
FDA-approved drugs with the pharmacy reimbursed based on the current
payment methodology.

Most importantly, drug importation legislation presents potential
patient safety issues. Allowing the importation of prescription drugs
raises a challenge to ensure that quality assurance standards have been
maintained. Prudent importation legislation must ensure maintenance of
quality assurance standards throughout the international drug
distribution system. In order to guarantee patient safety, agencies such
as the Food and Drug Administration and the United States Customs
Service must have the technological and financial resources to address
these safety concerns.

Opening the medication distribution channels to medications imported
from other counters will open up those channels to counterfeit
medications. I am sure all of us are aware of the potential for drug
counterfeiting. Drug counterfeiting is a world-wide problem. No country
is immune from the threat. However, drug importation, especially
personal importation only opens this door wider. Counterfeiters go where
the money is and the U.S. market is an excellent target for
pharmaceutical fraud, deception and counterfeiting. I commend the FDA
for their fight against drug counterfeiting and endorse the FDA report
on Combating Counterfeit Drugs released in February. What is of concern
is that the report puts forth an excellent strategy for combating drug
fraud and assuring drug integrity for Americans, but at the same time,
government agencies continue to allow U.S. residents to import
substandard, inferior and sometimes counterfeit drug products. We have
been fortunate that more people haven't been hurt or died from these
products. I have said and continue to say it is only a matter of time
before some horrific tragedy involving imported pharmaceuticals occurs.

AMCP believes that until more conclusive data are available as to the
likely impact of importation on the cost of drugs and the risks posed to
the American citizens, we will oppose proposals that allow the
importation of prescription drugs for sale in the United States.

Thank you again for this opportunity and I look forward to answering any
questions that you may have.

Marv Shepherd, Ph.D.

Director, Center for Pharmacoeconomic Studies

Professor and Chairman, Pharmacy Administration Division

College of Pharmacy

The University of Texas at Austin

\(512\) 471-6892

marvshepherd@mail.utexas.edu

[^1]: Associated Press, \"U.K. Pharmacy Filling U.S. Prescriptions,\"
    *New York Times*, May 2, 2004.

[^2]: "Mexican Drugs Shipped to US via Canada, say Consumers," *Scrip:
    World Pharmaceutical News*, No 2942, April 9, 2004, p 17.