Originally published on LinkedIn.
With drug prices in the spotlight of our national healthcare debate, one could certainly view Amazon’s entry last year into the pharmacy space as a welcome development. After all, when it comes to upending traditional business models by undercutting their prices, Amazon is king. For Americans, the tens of millions who don’t fill prescriptions each year because of cost, relief can’t come soon enough. For Amazon to succeed, Jeff Bezos should consider teaming up with Senator Bernie Sanders. Amazon’s support for The Affordable and Safe Prescription Drug Importation Act, introduced by Senator Bernie Sanders (I-VT)—to allow for the importation of lower-cost prescription drugs—would be the game changer that would have American patients cheering and the pharmaceutical industry crying.
Recent bi-partisan efforts to bring lower-cost generic drugs to market faster are a great step in the right direction, but they don’t infuse our captive pharmaceutical marketplace with competition to lower prices on patented – brand name – prescription drugs. Importation would fuel that competition. An unlikely alliance between our country’s most successful capitalist and trailblazing, Democratic Socialist is what we need!
Americans already know and take advantage of lower drug prices in other countries. They do so by using online pharmacies that sell medicines from Canada and other countries. According to the Kaiser Family Foundation, 8% of Americans say they have imported medicines for personal use because of cost. That practice is technically illegal under most circumstances, but no one is prosecuted. This de facto decriminalization may help a few million Americans per year find drug price relief, but so much more could be done if only a big player like Amazon would step into the fray.
In fact, Amazon’s most public move in pharmaceuticals was its $753 million purchase of an online pharmacy called PillPak back in September. At first glance, PillPak seems like a great fit for Amazon. It’s a 24/7 operation specializing in custom-packaged prescriptions for easy use and mail delivery. Unfortunately, PillPak’s prices for brand-name drugs are about the same as those at a CVS or Walgreens.
PillPak’s price for 90 pills of Januvia, which treats type 2 diabetes, is $1,308. At CVS in Brooklyn with a prescription discount card, the price would be a little less: $1,279. The price at a pharmacy in Canada, available online, is about $387.40. At those prices, uninsured Americans save thousands of dollars a year. When I write save, that assumes that the uninsured American could afford the medicine locally at all.
The main argument against importation is that patient safety would be compromised if it was legalized. The Pharmaceutical Researchers and Manufacturers of America (PhRMA), the drug lobby, pushes the narrative that people will fall victim to counterfeit and substandard drugs if they try and order lower-cost medicines online for personal import. Most recently, the opioid epidemic and illegal imports of fentanyl from China are used by PhRMA-funded groups to argue against importation.
I know firsthand that PhRMA’s exaggerations amount to scare tactics and fear mongering. My company, PharmacyChecker, verifies international online pharmacies for good standards of practices and compares their prices. We know that the FDA has never reported a single adverse reaction or death caused by the importation of a prescription drug from a pharmacy that required a valid prescription. In fact, peer-reviewed research, partially funded by the American Enterprise Institute, found no difference in quality between PharmacyChecker-verified international pharmacies and U.S. pharmacies.
The irony is that most pharmaceuticals sold inside the U.S. are foreign-made. In other words, drug importation is legal. According to the FDA, 80% of the active pharmaceutical ingredients and 40% of finished drugs are imported. Those figures are dated to statements made by the FDA in 2010 and their basis is unknown. Our researchers looked at the top 100 brand-name drugs sold in U.S. and found 71% were foreign-made.
So why is it illegal to import the same drugs at lower cost?
The answer is that the pharmaceutical and health products industries have spent about $4 billion over the past 20 years to successfully lobby Congress so that drug companies control the importation of their patented, brand-name drugs. It’s this distributional control that Amazon should challenge. In addition to acquiring PillPak, Amazon has purchased several wholesale pharmacies. But drug companies won’t sell to Amazon’s wholesale pharmacies any cheaper than it will to Cardinal, McKesson or AmerisourceBergen, the three largest wholesale pharmacies in the industry. They simply don’t have to: People need medicines to live so drug companies can set the price as high as possible, and they do.
Amazon should lobby Congress so that its wholesale pharmacies can import lower-cost drugs from countries with strong pharmaceutical regulations. It’s called parallel trade, which is legal in the European Union. That would allow Amazon’s PillPak to offer lower prices on brand drugs. It should also press Congress on personal drug importation, too. Amazon could set-up PillPak mail-order retail pharmacy distributors in Canada and the UK from which Americans could buy directly. Senator Sanders’s bill would also allow for this international pharmacy retail service.
And that brings us back to Januvia. Januvia’s active pharmaceutical ingredient, called sitagliptin, is made in Italy and formulated as a finished product in the UK. Then it’s sold to UK, Canadian and U.S. wholesalers. There are thousands of drugs like this. Having entered this industry, Amazon should now support safe importation of lower-cost drugs to help its own commercial interests and, more importantly, to give relief to Americans who can’t afford medicine. What a great place for Senator Sanders and Mr. Bezos to find common ground.Tagged with: Amazon, Bernie Sanders, Jeff Bezos