Importation of Prescription Drugs: A Side-by-Side Comparison of Current Law, S. 109/H.R. 328,S. 184/H.R. 753, and S. 334/H.R. 700
Released: 2005-12-06T00:00:00

Introduction

In recent years, as prices of prescription drugs have risen, many in Congress have sponsoredlegislation to permit the importation of Food and Drug Administration (FDA) approved drugs fromless expensive foreign sources. In the 109th Congress, three pairs of bills have been introduced torepeal the existing import restrictions and provide for limited forms of importation of prescriptiondrugs. Current law and the bills all seek to balance the availability of imported prescription drugs-- both for commercial and personal use -- and the assurance that those imports would be safe andeffective. An underlying goal is to reduce or restrain the growth of the financial burden thatprescription drugs place on U.S. consumers.

Current law bars importation unless the Secretary of Health and Human Services (HHS)certifies that imports are safe and offers cost savings to U.S. consumers. Congress reaffirmed thisrequirement, first established by the Medicine Equity and Drug Safety (MEDS) Act of 2000, mostrecently in the Medicare Prescription Drug, Improvement, and Modernization Act (MMA, P.L.108-173 ) in December 2003. The three bill pairs each would eliminate this requirement and, instead,include other potential safeguards regarding drug safety and effectiveness. They all would actprimarily by replacing or amending Section 804 of the Federal Food, Drug, and Cosmetic Act(FFDCA), which had been initially added to the FFDCA by the Medicine Equity and Drug Safety(MEDS) Act of 2000; individual bills would amend other laws.

This report compares the provisions of three approaches to prescription drug importation(represented by three Senate and three House bills) with provisions on the subject in currentlaw. (1) The three bill pairsare:

The Pharmaceutical Market Access Act of 2005 : S. 109 ,introduced by Senator Vitter on January 24, 2005, and H.R. 328 , introduced byRepresentative Gutknecht on January 25, 2005; referred to in this report as the Vitter-Gutknechtbills. No action has been taken.

The Safe Importation of Medical Products and Other Rx Therapies Actof 2005, or the Safe IMPORT Act of 2005 : S. 184 , introduced by Senator Gregg onJanuary 26, 2005, and H.R. 753 , introduced by Representative Bradley on February10, 2005; referred to in this report as the Gregg-Bradley bills. No action has beentaken.

The Pharmaceutical Market Access and Drug Safety Act of 2005 : S. 334 , introduced by Senator Dorgan on February 9, 2005, and H.R. 700 , introduced the same day by Representative Emerson; referred to in this report as theDorgan-Emerson bills. In July 2005, Senator Dorgan successfully offered the drug importationprovisions as an amendment to the Federal Trade Commission reauthorization bill ( S. 1392 ) ordered to be reported by the Senate Commerce, Science and Transportation Committee. (2)

The differences in approach across the bills fall into three areas: attempts to ensure thatimported drugs are safe and effective; attempts to influence industry behavior so drugs are availablefor import by U.S. consumers at cost savings to current domestic prices; and administrativearrangements.

Safe and Effective Drugs

Relationship to FDA Approval

Current law and language proposed by the Vitter-Gutknecht and Gregg-Bradley billsexplicitly require that an imported drug be approved for U.S. sale by the FDA. The Dorgan-Emersonbills would allow different administrative requirements for importation while maintaining thesubstantive elements of FDA approval. The Dorgan-Emerson bills require that a manufacturer notifythe HHS Secretary when a drug that could be imported differs from the version FDA had approvedfor sale in the United States (the "U.S. label drug"). The bills require extensive information aboutwhether the difference, if it were to be made to a U.S. label drug, would require a supplementalapplication to FDA and whether FDA would require that the application be processed before thedrug could be marketed.

Permitted Countries

The three bills and current law vary in the countries from which they would permit drugimportation. The most inclusive are the Vitter-Gutknecht bills, (3) which include Australia,Canada, Israel, Japan, New Zealand, Switzerland, South Africa, members of the European Union,Iceland, Liechtenstein, and Norway. These bills also would allow the Secretary to designateadditional countries that have equivalent regulatory requirements regarding safety and effectiveness,or to remove a country that does not. The Dorgan-Emerson bills differ from the Vitter-Gutknechtbills by excluding Israel, South Africa, and members of the European Economic Area that are notalso members of the European Union (excluded are Iceland, Liechtenstein, and Norway), and, forEuropean Union countries, by adding a reference to their Annex to the Treaty of Accession thatessentially disqualifies the 10 countries admitted to membership in May 2004 (excluded are Cyprus,the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, and the SlovakRepublic). The Gregg-Bradley bills would include Canada and allow the Secretary, three years afterenactment, to designate as eligible any members of the European Union as of December 2003. Current law includes only Canada, although it allows the Secretary to grant waivers permittingpersonal-use importation from other countries.

Ensuring Drug Identity

Sponsors of all three pairs of bills are concerned about the potential for entry of adulteratedor counterfeit drugs into the U.S. market. Consequently, they call for a variety of procedurescovering the registration of exporters or importers; chain-of-custody documentation; inspections ofmanufacturing, storage, and shipping facilities; laboratory testing of drug samples; packaging; andlabeling of shipping containers and consumer products.

Registration. Current law requires that aCanadian establishment involved in importing prescription drugs to the United States register itsname and place of business and the name of its U.S. agent with the Secretary. All three bills haveextensive registration requirements. The specifics vary and cover extensive recordkeeping,monitoring, inspections, and fees. The Vitter-Gutknecht bills would require all exporters to register;the Gregg-Bradley and Dorgan-Emerson bills require all exporters and all commercial importers toregister.

Monitoring, Inspecting, and Testing. Whilecurrent law relies on laboratory testing of samples of every shipment of imported drugs to verify theircontent, potency, and labeling, the three proposed bills focus on documentation of a monitored,uninterrupted chain of custody from manufacturing facility to importer. The requirements relatedto registration involve ongoing and onsite physical monitoring of the facilities of a drug'smanufacturer, exporter, or importer. If the Secretary determines it necessary, these would includethe inspection of any facility (and its records) that handles the product along the chain of custody.

Packaging and Labeling. In addressingcounterfeiting and product tampering, all three bills promote measures intended to ensure that thedrug dispensed to the individual consumer is the same product that was tested, monitored, orinspected at the manufacturing, shipping, or storage facility. The Vitter-Gutknecht bills wouldrequire that the packaging of all prescription drugs (not just those being imported) incorporate overtoptically variable counterfeit-resistant technologies that provide visible identification of the product,and be similar to those used to secure U.S. currency. In addition, manufacturers must incorporatethe technologies into multiple elements of the packaging (including blister packs, shrink wrap,package labels, package seals, bottles, and boxes). Also, shipping containers of prescription drugsmust have labels that incorporate technologies that enable inspectors to verify the authenticity of theshipment. The Gregg-Bradley bills would direct the Secretary to require the use of electronictrack-and-trace technology at the case and pallet level that would identify each sale, purchase, ortrade of each case or pallet. The Dorgan-Emerson bills require that the exporter and importer agreeto mark each shipping container to identify its compliance with all registration conditions. Themarkings must include anti-counterfeiting or track-and-trace technology, taking into account theireconomic and technical feasibility, and must be designed to prevent unauthorized affixation.

Internet Pharmacies. Current law does notaddress use of the Internet to sell or purchase imported prescription drugs. The Vitter-Gutknechtbills have no provisions specifically related to Internet pharmacy procedures, but include qualifiedInternet pharmacies among other registered exporters and the extensive associated requirements. The Gregg-Bradley and Dorgan-Emerson bills do address Internet sales. Their provisions addressregistration, posted information, prescriptions, and relationship to medical care.

The Gregg-Bradley bills present an extensive statutory and regulatory structure for Internetpharmacies, placing it in the FFDCA but set apart from the importation sections. In addition toregistration, the bills would require that Internet pharmacies provide specific professional services,including confidential patient medication profiles, "interactive and meaningful consultation by alicensed pharmacist," and verification of prescription validity. They require advance notice ofcommercial shipments of prescription drugs and include a licensing fee. Providers of interactivecomputer services would be liable if they accept advertising for a prescription drug from anunlicensed Internet pharmacy or accept advertising stating that a physician's prescription is notneeded to obtain a prescription drug. The Gregg-Bradley bills also require policies and proceduresto prevent payments for unlawful Internet pharmacy requests.

The Dorgan-Emerson bills would require that detailed information be accessible on theInternet site, covering pharmacist credentials, address and telephone contacts, and the name andprofessional licensure information of the person, if any, who provides for medical consultationsthrough the site for purposes of providing prescriptions. No one could dispense or sell a drug if thepurchaser or patient who communicated through the Internet did not have a valid U.S. prescription. The dispenser of the prescription drug must have a "qualifying medical relationship with the patient."

Cost Savings to U.S. Consumers

Impetus to amend current law goes beyond the concern with drug safety. Even were theSecretary to issue the certification necessary to begin the drug importation section in the FFDCA,many analysts and Members of Congress anticipate manufacturer resistance. The Vitter-Gutknechtand Dorgan-Emerson bills contain specific provisions designed to influence industry behavior; theGregg-Bradley bills do not.

Discrimination and Unfair Acts

The Vitter-Gutknecht bills and the Dorgan-Emerson bills would make it "unlawful for amanufacturer, directly or indirectly (including being a party to a licensing or other agreement)," todiscriminate or act unfairly against an exporter, importer, or person who distributes, sells, or usesan imported prescription drug by charging a higher price; denying, restricting, or delaying supplies;or refusing to do business.

Drug Differences

The Vitter-Gutknecht and Dorgan-Emerson bills would make it unlawful for a manufacturerto make a drug for distribution in a permitted country so that it differs from the drug made for U.S.distribution "for the purpose of restricting importation of the drug.... " Provisions describeinvolvement of the Federal Trade Commission and the state attorneys general. The extensivenotification requirements in the Dorgan-Emerson bills regarding differences between a drug amanufacturer produces for sale in a permitted country and the drug it produces for U.S. distributioncould serve, in addition to addressing safety, to influence industry decisions.

Patent Law

The Vitter-Gutknecht and Dorgan-Emerson bills would insert a new subsection in the Patentand Trademark Act that would reverse judicial precedent holding that sales of patented goods outsidethe United States do not exhaust the U.S. patent. Under this provision, goods that were the subjectof authorized foreign sales by the U.S. patent holder may be imported into the United States withoutregard to the U.S. patent.

Administration of Importation Provisions

The timing and funding of importation activities vary across current law and the proposedbills.

Funding

Current law includes no explicit funding mechanism other than authorizing appropriationsof such sums as necessary to implement the prescription drug importation provisions. TheVitter-Gutknecht bills would not only authorize appropriations but also provide for exporter fees tocover the cost of administering the import provisions. The Gregg-Bradley and Dorgan-Emerson billsprovide for both exporter and commercial importer fees designed to cover all costs of the program.

All three bills link the aggregate total of all fees to the estimated costs of the importationprogram, setting a limit of 1% of the total price of drugs imported. The Secretary would collect fromeach exporter (and importer, except in the Vitter-Gutknecht bills) both a flat registration fee and aproportional registration fee. Each individual importer or exporter would pay the latter fee basedon the extent of its own activity and calculated to estimate its proportion of the aggregate amount. The bills would require that these fees be used only for the administration of the importationprovisions that the bills would add.

Effective Dates

Current law does not specify when importation could begin, other than linking it to therequired safety and cost certification by the Secretary. It directs the Secretary to exercise discretionto permit importation by an individual for personal use, if it does not appear to present anunreasonable risk to the individual. The three proposed bills stipulate various time frames forcommercial and personal-use importation, with varying times for different countries.

The Vitter-Gutknecht bills would require that the HHS Secretary, in consultation with theUnited States Trade Representative and the Commissioner of Customs, issue regulations not laterthan 180 days after enactment, permitting pharmacists, pharmacies, wholesalers, and individuals toimport qualifying drugs from permitted countries. The Gregg-Bradley bills' section on personalimportation would take effect on the date of enactment, and their section on commercial importationwould take effect one year after enactment, both "without regard to whether the Secretary â¦ haspromulgated regulationsâ¦. " The Dorgan-Emerson bills would require that the Secretarypromulgate a final rule for implementing the importation provisions not later than one year afterpromulgating an interim rule. It also states that the importation provisions shall "permit theimportation of qualifying drugs â¦ without regard to the status of the issuance of implementingregulations" from registered exporters 90 days after enactment and from permitted countries byregistered importers one year after enactment.

Side-by-Side Comparison

The following table arrays the prescription drug importation provisions of current law andthe three pairs of proposed bills, with the columns ordered chronologically based on the date ofenactment or introduction. Organized by topic, the rows do not directly follow the order ofprovisions in any of the compared documents.

Table 1. Comparison of Prescription Drug Importation Provisions in Current Law, S. 109/H.R. 328,S. 184/H.R. 753, and S. 334/H.R. 700