The Journal. - Will Florida’s Plan to Get Cheap Drugs From Canada Work?

Episode Date: January 11, 2024

Florida recently became the first state to win approval from the Food and Drug Administration to import prescription drugs from Canada. As WSJ’s Liz Essley Whyte explains, i t's a milestone in efforts to reduce the cost of medications, but the plan faces opposition from pharmaceutical groups and Canadian officials. Further Reading: -Florida Is First State Allowed to Import Drugs From Canada in Bid to Reduce Costs  -Expensive Drugs Targeted for First U.S. Price Negotiations  Further Listening: -Philip Morris Tried to Pivot to Pharmaceuticals. It Didn’t Go Well.  Learn more about your ad choices. Visit megaphone.fm/adchoices

For years, politicians on both sides of the aisle have been saying that prescription drug prices in the U.S. are too high, and that Americans should be able to buy them from our neighbor to the north, Canada. We can import lettuce and tomato vegetables from farms all over the world. But somehow we cannot re-import from Canada brand-name prescription drugs. An EpiPen in the United States of America is $646. It's $120 in Canada. The problem is they're too high in America and that you can go right across the border

and get drugs for a fraction of the cost that they cost us high in America and that you can go right across the border and get drugs for a fraction of the cost that they cost us here in America. But despite all that interest, there have been a lot of barriers to getting drugs from Canada. Until last week. Here's our colleague Liz Esley-White. For the first time, the United States is going to allow the importation of drugs from Canada, and Florida is the state that gets to do this first. Florida officials say the new plan could save the state $180 million in just the first year. And there's hope that Florida is the start of a change in how Americans buy prescription drugs. This does, for the first time, open the door for this idea, period.

You know, there are other states that are lining up to try this, and it's a big policy shift for the U.S. But there are a lot of barriers to this particular program actually getting implemented. barriers to this particular program actually getting implemented. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, January 11th. Coming up on the show, will Florida's plan to buy prescription drugs from Canada work? Get chicken parmesan delivered. Sunshine? No. Some wine? Yes. Get almost, almost anything delivered with Uber Eats. Order now. Alcohol in select markets.

See app for details. Americans have been buying drugs from Canada for years, even though it's mostly illegal to do so. People even post about it on social media. My doctor writes the prescription. He sends it straight to the Canada pharmacy. So all you have to do is go to Google and type Canada Cloud Pharmacy. I told her she should really check out Northwest Pharmacy. They're a Canadian pharmacy. I've used them for years.

Here's Liz again. There are so many people who will take the bus up to Canada or who will order through Canadian pharmacies online, but that's mostly illegal. There are exceptions. So you can, you know, go to Canada, buy an over-the-counter drug that has no safety concerns and bring it back and you're not committing any crime. But for the most part, it's totally illegal. For years, the FDA and other public health officials said, you know, we have these concerns because in the U.S. we have a very tightly regulated drug system. We don't want to let any contaminated drugs or drugs that might not be totally potent into our system. Could you just give a quick overview of like why Canadian drugs are cheaper in general? The quick answer is that Canada does two things. One, it regulates the price of medicines.

There's a board in Canada that says this is the ceiling prescription drug manufacturers and you can't sell it for more than that here in Canada. And two, it's public funded prescription drug plans. They get together and they negotiate the price for most drugs in Canada. So they sit down with drug manufacturers and say, you know, we could pay this, we have this many people on this drug, and drug manufacturers, in some cases, give a discount on their drugs.

But in the U.S., there's no equivalent government board. Drug prices are set by the pharmaceutical companies, and insurance plans and government programs like Medicaid then haggle with them to try to lower those prices. As a result, Canadians and Americans paid drastically different prices for the same drugs. In a number of recent reports, Canadians generally have prices that are two to four times cheaper than the United States. So, for example, Bictarvy is a drug that Florida wants to import. It's an HIV AIDS drug. In the U.S., you're going to pay about $93.14 per tablet. If you were to

go to a Canadian pharmacy, you could get it for $47.93 per tablet. And those numbers come from pharmacychecker.com, which looks at a bunch of different Canadian and U.S. pharmacies. Which is why policymakers have been talking about importing drugs from Canada for decades. A group of us are preparing to introduce legislation once again allowing for the re-importation of prescription drugs. In the early 2000s, Congress even passed a law that allowed some drugs to come in from Canada. In the early 2000s, Congress even passed a law that allowed some drugs to come in from Canada. But the law required the Secretary of Health and Human Services to certify that drug importation was both safe and cost effective. Nearly two decades passed without anything happening.

And then in 2020, the Trump administration cleared the hurdle. I'm giving governors the right to go to Canada because they'll pay approximately 50% less for their drugs that they buy for their states. The Biden administration followed suit. It issued an executive order telling the Food and Drug Administration to work with states on their plans. Florida was the first state to act, submitting an application to the FDA.

And what was Florida's proposal? What was in that application? Florida said, we'd like to import these drugs. It had a list of drugs and it outlined, according to the way that the FDA had set out, like how it was gonna test for, to make sure that the drugs weren't contaminated, how it was going to relabel the drugs, how it was going to make sure that adverse events were reported to the FDA.

All these hoops that FDA had set up, Florida jumped through them. But there were still roadblocks. Florida's proposal sat with the FDA for two years without approval. So the state sued. Here's Governor Ron DeSantis. They have unlawfully withheld and unreasonably delayed approval of Florida's program, and we think this violates federal law. On January 5th, just this past Friday, the FDA approved Florida's proposal. And so now that that approval has happened, what drugs are eligible in this plan from Florida? Yeah, so they have a kind of long list of drugs. How it will exactly work and what exactly drugs will get in, those will be, I think, subject to another approval from FDA.

But it's HIV AIDS drugs. It's a prostate cancer drug known as Xtandi. It's some antipsychotics that help people with schizophrenia or bipolar disorder. Those are kind of the main lists of drugs that's on there. And you mentioned that it's a trial period sort of of two years. What does Florida have to do to prove to the FDA that this is worthwhile, that this is working? Well, so they have to report on, is this actually saving the state of Florida any money? And they have to report, are there any safety issues?

And then after two years, they could get it to go longer, or FDA could just cancel it and say, this isn't working. Who does Florida say would benefit from this plan? Florida's idea is to buy these drugs for the people that its state agencies take care of. So that's the Department of Corrections. In Florida, there's a department that helps people with disabilities. So that's the first group of people that would be getting these imported drugs. Florida now has a two-year trial run for the program. And during that time, the state has to report any safety issues with the drugs and how much money is actually being saved. The results will determine whether the FDA will extend the policy.

Is it smooth sailing from here? Is this the start of a bigger trend? It could be, but almost everyone thinks it's pretty unlikely. Florida is going to have to overcome some serious challenges and serious opposition, as will any other state that wants to do this. What those obstacles are and how they'll affect Florida's plan, that's after the break. Introducing TD Insurance for Business, with customized coverage options for your business.

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Well, what about two? Right now, get a small, organic Fairtrade coffee and a tasty bacon and egg or breakfast sandwich for only $5 at A&W's in Ontario. After years of trying, Florida has finally gotten the clear to import drugs from Canada. But there are powerful players that don't like the plan. First off, the pharmaceutical companies. Well, the reason they give is the safety concerns.

Even though the FDA has said, OK, we think we can do this safely now, there is kind of an idea of like, well, maybe this even though this is Florida just doing this through this official channel, maybe this will encourage more people to go on these random websites that claim to be Canadian pharmacies and get their drugs online when really what they're getting is some counterfeit drug from, you know, a guy in Malaysia. And there's the worry that this will further upset the safety of the U.S. drug supply. So to be clear, is there any reason to believe that pharmaceutical drugs from Canada are not safe? Generally, Canada is seen as a safe source of medications. They do have a regulatory system that even U.S. officials say is reliable. And so they're generally seen as, you know, the best first step. The FDA has said that it thinks Florida can safely import drugs if the state follows the steps the agency has laid out.

And it's going to be monitoring Florida to make sure it does. Have pharmaceutical companies said anything about concerns for, like, their own bottom line? They will lose some money if this were to go into place and if it were to be expanded. Like, they make more money off of Americans than they do Canadians. And that's how drug pricing has worked for a really long time. And it doesn't really make sense to them to be negotiating with one partner and saying, we'll do business with you on X terms. And, you know, that partner is selling their drugs back to Florida or whoever it is. Beside that petition they filed,

is there anything these pharma companies can do to stop this from happening? Well, pharma, the trade association, is widely expected to sue. They came out and said, we're going to do everything we can to stop this. A spokesperson for pharma said that medicines approved and regulated by Canada for sale there are safe, but expressed concern about the integrity of the supply chain. Canadian authorities are also against Florida importing drugs from their country, but for totally different reasons than the drug companies. They're worried about drug shortages for their own citizens.

In the past, Canadian officials and thought leaders have been pretty negative about the idea of Canada exporting any drugs to the U.S. And we saw in 2020 the Canadian government made a move to block any exports that would cause or exacerbate a shortage. And then last week when this decision was announced, Canada's health minister came out and mostly offered words of reassurance saying, you know, we have the policies in place that will make sure we don't have any shortages.

We have the regulatory ability to ensure that the drug supply is not affected in a way that would result in shortages. And we're going to do everything in our power to make sure that the drug supply is not affected in a way that would result in shortages. And we're going to do everything in our power to make sure that that's the case. And then other people told us, you know, there's no way that Canada allows this. I mean, they could say, look, we think this will cause a shortage and we're not going to allow it based under our current rules. They could say to be a licensed wholesaler in Canada, you're not allowed to do this. There's a bunch of different ways they could

block their wholesaler companies from becoming the exporter that Florida needs. Meanwhile, eight other U.S. states have also moved forward with plans to import Canadian drugs. Florida will be a litmus test. Colorado is probably the state that's farthest along after Florida. And then, you know, Congress could also pass legislation at the federal level to say, hey, this worked for Florida. Like, let's do it in a different way. Like, let's make it legal for private individuals to do this, or let's set up a federal program to do it. Like, there's always a possibility that the law could change more if, for some reason, this is seen as a great thing to do.

And so what are you going to be looking at next or keeping an eye on? So I think an interesting question is who gets credit for this? If it does work, does Governor DeSantis get the credit? Does President Biden? Does President Trump? They could all take this in different ways and do some good messaging and get the win for it. I think big picture, if you think about what this means for drug pricing generally, one response to this is, you know, the U.S. could just negotiate drug prices on a grander scale, just like Canada does. It could have the regulations on drug pricing that Canada does. You know, we don't have to just

buy drugs from Canada. We could just do their policy steps. And so that's a common response that I've heard. The idea that like Canada should have all these rules and it should do all these negotiations and then Florida can just piggyback on that. I mean, I'm sure that seems really unfair to Canadian policymakers and to a lot of experts, it seems like nonsensical. Like Florida could just, instead of importing drugs, Florida could import some, you know, more hardball negotiation tactics or something like that, or the U.S. could. And so it's kind of a jerry-rigged system to try to get the price that Canada achieved through talking to drug companies and bargaining. That's all for today, Thursday, January 11th. The Journal is a co-production of Spotify and The Wall Street Journal.

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