In accordance with a Colorado legislative bill passed in 2019, the Department of Health Care Policy and Financing (DHCPF) is close to making it possible for Coloradans to access savings on drug costs by getting imported pharmaceuticals from Canada. Two decades ago, in 2003, Congress authorized importation of drugs from Canada. A few years later, the Federal Food Drug and Cosmetic Act (FDCA), as amended, permitted such importation by a pharmacist or wholesaler, provided the drugs meet certain minimum standards, will pose no additional risk to the public’s health and safety, and results in a significant reduction in costs to consumers. The federal Department of Health and Human Services (HHS) can approve a drug importation program if these conditions are met, and Colorado’s Senate Bill 19-005 directed DHCPF to implement a Canadian Prescription Drug Importation Program.
Early steps in the process
In December of 2019, HHS released a Notice of Proposed Rulemaking, and Colorado responded with a program proposal in March of 2020. The final rule went into effect on November 30, 2020, putting in place the federal regulatory framework to successfully develop and operate a drug importation program. DHCPF then released an Invitation to Negotiate (ITN) in January 2021, seeking vendors for the program. Upon closure of the ITN in April 2021, the Department began negotiations with supply chain partners and identified program consultants and certifiers to ensure a compliant program. DHCPF announced all program partners in August 2022 and in December submitted a Section 804 Importation Program (SIP) to the FDA for federal review and approval. The FDA projected a six-month SIP review timeline. DHCPF estimates that the Colorado Importation Program may be operational by mid-2023.
How the program will work for Canadian Drug Access
Drug manufacturers approved by the FDA will sell the eligible prescription drugs to Colorado’s Foreign Seller, AdiraMedica, which is located in Canada. AdiraMedica will export the eligible prescription drugs to Colorado’s Importer, Premier Pharmaceuticals, located in the U.S. Premier Pharmaceuticals will have the imported medications sent to Q Laboratories for testing. Once the tests are approved by FDA, the imported drugs will be sent to Omega Tech Labs for relabeling. Once the eligible prescription drugs are relabeled and shipped back to Premier Pharmaceuticals, they will be distributed to Colorado pharmacies where they can be dispensed to Colorado consumers. (Graphic courtesy of CO Dept. of Health Care Policy and Financing)
AdiraMedica as foreign seller and Premier Pharmaceuticals as importer are necessary supply chain partners. There is also a “reporting vendor”—Rocky Mountain Poison & Drug Safety. AdiraMedica will be responsible for procuring Canadian drugs for export to the U.S. This entity will purchase the products for Colorado’s program and ensure they meet specifications for exportation to the U.S. Premier Pharmaceuticals, a U.S. wholesaler based in Idaho, will be responsible for testing, relabeling, and drug distribution to participating Colorado pharmacies. Rocky Mountain Poison & Drug Safety will manage the adverse event reporting process for the program, as well as consumer education and communication.
How much might Coloradans save when buying drugs from Canada?
DHCPF has estimated a 65% overall average savings for Colorado consumers. That figure will vary from one drug to another, and the overall savings will also be dictated in part by how much “market replacement” occurs. This refers to how widely Coloradans will make use of the lower-priced drugs from Canada.
At this point Colorado’s drug list contains 112 unique drugs and dosages, including medications that treat conditions such as respiratory diseases, cancer, Type 2 diabetes, HIV, multiple sclerosis and more. In a 2022 annual report, DHCPF published a projected savings chart for currently targeted drug classes. This showed an expected savings as high as 91% for antipsychotics, 80% for smoking cessation, 78% for Type 2 diabetes, 73% for blood thinners, and savings in the 60 to 70% range for multiple sclerosis, respiratory, and a category labeled “women’s health.”
That same report charted “potential savings” statewide of $87 million at a market replacement rate of 25% and $52 million at a replacement rate of 15%. “The range of savings depends on the degree of adoption in the market,” the report read. “Rather than assume a 100% adoption of imported drugs across the market, Colorado conservatively estimates a 15-25% replacement within the market.”
The report singled out the drug Latuda®, an antipsychotic, as what it called “a staggering example of savings” from Colorado’s importation program. DHCPF projects a 90% savings on Latuda. “For a month’s supply of this highly utilized drug used to treat schizophrenia, a Coloradan without insurance coverage could expect to pay nearly $1,500,” the agency wrote. “Colorado’s program could supply an imported version at close to $120 per month.”
What allows Canadian drug prices to be so much lower? DHCPF points to the fact that Canadian provincial governments and an alliance of governmental entities negotiate drug prices with pharmaceutical companies, allowing for better ability to control prices.
Drugs eligible for importation to Colorado
According to DHCPF, prescription drugs eligible for importation are those that could be sold legally in either the Canadian or American market with the appropriate labeling. However, per federal statute, Colorado state law, and the final importation rule, the following drugs are NOT eligible for importation:
● Controlled substances (such as Percocet, Vicodin)
● Biological products (such as Humira, insulin)
● Infused and parenteral (drugs not taken by mouth, such as those given at an infusion
● Intravenously injected drugs, including those given at an infusion center
● Drugs inhaled during surgery
● Drugs administered intrathecally or intraocularly
● Drugs with a Risk Evaluation Mitigation Strategy (REMS)
“Colorado plans to target expensive drugs in our state that are eligible for importation,” the agency states. “The Department supports changes to federal statute that would allow for the importation of biologics. Many of these drugs are widely available at pharmacy counters, require no additional safety protocols, and are some of the most expensive drugs in the state.”
DHCPF says it has analyzed hundreds of drugs eligible for importation to understand the potential for cost savings. “We will be working with our selected supply chain vendors and drug manufacturers in Canada to identify a final list of drugs.” The agency identified these drug categories as being “ripe for importation”:
● Certain drug classes, such as medications that treat Type 2 diabetes, cardiac conditions, multiple sclerosis, cancer, or HIV
● Both brand name and generic drugs
● Drugs that have a high unit cost
● Specialty drugs
● High-volume drugs that may be a lower cost per unit but the price difference is so significant they are worth considering (e.g.: thyroid tablets)
In its proposal submitted to the FDA in December of 2022, DHCPF analyzed over 2000 NDCs (National Drug Codes) and its submitted list contains the current 112 unique drugs and dosages. This list is not yet final, pending negotiations with drug manufacturers to secure agreements to access supply.
Who in Colorado will have access to Canadian Drug access savings?
Colorado consumers will be able to purchase Canadian imported drugs once the program is approved by the federal government. Consumers, including Medicare beneficiaries, will want to check to see which pharmacies are participating in the program and determine whether their health plan also covers such drugs. Cases will vary depending on what the particular drugs are. The imported drug may or may not be the better deal if your insurance already covers it. There may be cases where you’ll be newly able to afford a drug your insurance doesn’t cover, or one that exacts a steep cost-sharing by you if it is covered. Consumers will want to evaluate their options carefully.
Will insurers participate in the program? DHCPF says it has met with health insurance carriers and has encouraged their participation in the program. However, SB 19-005, the authorizing legislation, does not mandate that plans cover imported drugs. For insurers it is optional. This will introduce another reason to carefully assess your options as a consumer when it comes to a particular drug. How will you know if your insurance and/or your chosen pharmacy will make an imported drug your optimal cost saver? At this point all that is known is that DHCPF has been working with partners in the pharmacy and insurance industries to promote access to transparent information to help consumers evaluate their best options.
Will Colorado’s Medicaid program—Health First Colorado—participate in the drug importation program? DHCPF says initial analysis indicates Health First Colorado would not see significant savings from importation. This is because of deep discounts already afforded by the Medicaid Rebate Program. Nonetheless the agency says it may explore importing specific drugs for Health First Colorado in the future.
What oversight will Colorado’s program have on Canadian Drug Purchases?
The FDA will be DHCPF’s main federal partner in the administration of the program. The FDA will approve the structure of the program and give the state of Colorado permission to begin importing drugs from Canada. The state will also have an oversight role to ensure the safety and quality of the drugs imported, and will be responsible for reporting this information to the FDA. Also, the Colorado State Board of Pharmacy will continue to regulate the receipt, storage and proper dispensing of these imported drugs (like any other prescription drug) pursuant to valid, patient-specific orders once the drug is received by a Colorado-based, Board-registered pharmacy. You can check for registered pharmacies in Colorado at https://dpo.colorado.gov/Pharmacy.
In addition, the FDA has authority to regulate drug supply chains and to track and trace prescription drugs intended for sale in the United States. It requires that manufacturers, wholesale distributors, packagers, and third-party distributors of drugs meet certain standards and register with the FDA. This process is meant to prevent counterfeit medication from entering the U.S. Colorado’s Program will be fully compliant with such oversight.
While the FDA doesn’t regulate drugs that are sold in pharmacies located outside the United States, it does regulate medication that is manufactured abroad and then sold in the U.S. In fact, says the DHCPF, 68% of the top 100 drugs, based on expenditures in Medicare Part D, are not made in the U.S., and the FDA indicates 78% of active pharmaceutical ingredient manufacturers are located outside of the U.S. DHCPF states that “Colorado’s importation program will be using the same FDA-approved manufacturers as the drugs in the current U.S. system today.” And the drugs will be relabeled to comply with U.S. standards and distribution in Colorado. This essentially means the risk of counterfeit drugs entering the U.S. distribution chain via the importation program would be no greater than such a risk is today for drugs routinely obtained within the U.S.
It’s important to note that the oversight framework for Colorado’s drug importation program represents a crucial component that distinguishes it from the practice of individual private consumers on their own ordering prescription drugs from Canada—a practice referred to as “personal importation.” Personal importation is when an individual purchases prescription drugs from a pharmacy in another country and has the drug sent to their residence. Such “unofficial” sourcing of drugs can harbor risks for the private buyer, due to the absence of robust oversight. See separate AgeWise Colorado article on “Online Pharmacies” [Online Pharmacies: Are They Safe? – AgeWise Colorado] for more details on these risks.